Joint venture

[Terrance Clark]

I am curious on how joint ventures work when doing investing with contractors. I have heard to stay away from the idea but however a contractor we have been doing business with keeps asking to do a joint project. In terms of the work and actually agreement. What do you all suggest?

[Jonathan Makovsky]

@Terrance Clark great question!

1) First and foremost get a good attorney and a rock solid Operating Agreement.

2) There is no hard and fast rules for how it should work. Do whatever works best for you guys, where you both feel that you are getting a good deal. Personally, I split my deals 50/50 - sometimes I work harder, other times my business partner does, it depends on the deal.

3) Make sure to outline all responsibilities in the partnership. For example, is he taking a GC fee in addition to his split of profits? What are your roles of the flip?

4) Will he be writing checks directly from the account? If yes, make sure that you are comfortable with that arrangement! If not, maybe fund the account as the work is getting done.

Keep us posted!