Joint Venture

[Arthur Banks]

I'm looking to present a deal(s) to my parents. Being as they are my parents they would more than likely simply loan (no interest)/give me the money, but I want to approach it from a business standpoint A) to show them they would get better returns than just sitting in the bank and could be great supplemental income for retirement years and B) I'm not looking for a handout but truly trying to learn how to structure deals for private money in the future.

That being said those of you who have partnered/joint venture would you be so kind as to share some of your different agreements? I'm looking for multiple options to present.

Thanks!

[Ed O.]

Every private money deal I have done has paid interest to the lender. No splits, profit shares, etc.

It keeps it clean and simple and keeps you in full control of the investment.

I think payments being paid on performance / profit splits can lead to tension in the family and limit your control in a deal.

For instance, if you were going to sell for a loss, and your parents disagreed, or vice versa. By paying interest, fulfilling your obligations under the agreement are pretty clearly completed or not, which I think could save you a lot of drama.

Speaking from past partnership experiences, with unwritten, open ended arrangements and agreements, it's great at the start until one person feel's like they're carrying the whole team. Then defining who has done what and how balanced or equal the work has been done becomes another mess.