Anyone done a Joint Venture before?

[Steve S.]

Has anyone out there ever done a joint venture with a company before? Curious as to how the experience went and how it worked out for you.

[Jeffrey S. Breglio]

Here's copy and paste that I often send to people considering doing deals out of state. It's doubly true for partnering situations.

Nearly every "really bad" deal that comes across my desk stems from investing out of state. Seriously! As a lawyer, I'm only brought in on the bad deals. And there are good experiences, too. But it is a much more difficult process when you can't personally oversee your investments. I generally tend to advise away from doing so. But, I don't want to rain on your parade either. So here are just some tips.

Be very careful about partnering with someone there. This is where most investors get scammed. Because it's out of state, investors almost have to seek someone local to work with. Be careful and choose wisely.

Thoroughly vet any one you do business with, just like your tenants--criminal, BK, credit reports! If you can make it out there, network in the REIAs and talk to others about potential partners.

Do a double blind comparison: Work two people at once and don't inform one about the other to get two different opinions on a particular deal. Like two agents, for example, to see if one is over inflating the numbers.

Don't jump into a big project or multiple projects. It's easier to walk away from one bad property than 10.

Have proper documentation for every transaction, every detail in writing. And make every transaction independent of the rest. The more you commingle with the partner, the more difficult any one issue is to prove, and get out of.

Hold partner accountable every day. If there is even an inch of impropriety, you can bet there will be more. And it will be much more difficult to extricate yourself.

Have an independent party on your side. A title co. RE agent or PM. Attorney. CPA. Bookkeeper. Someone that only works for you! Always demand ALL paperwork from every transaction from the closing company itself. Don't wait for the partner to send. 

Pay an agent or someone to swing by house to check on it and to be your eyes.

And, and this is NOT a bad thing, don't trust anyone. It just means to take control of the situation.

I'm sure there are more tips. But happy investing!

Jeff