When Setting Up a Joint Venture Here Are Some Basics

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Here is some basic advice for donig a Joint Venture. Treat it as a business, even if they are family or friends. 

You need a written agreement as to how everything flows. Who is the money investor and their responsibilities, who is the management investor etc. How are the cash distributions handled when a property is sold? Who covers any losses? 

What happens when one of you chooses to go sailing around the world and no longer wants to be in the venture? What kinds of insurance will you carry? 

Will you do the rehab yourself or hire contractors? In most jurisdictions, using an LLC is far superior to a Corp when it comes to real estate. Who are you going to use for legal? Who are you going to use for accounting/CPA. When are distributions to be made? 

Are there any spouses involved? What is their role. 

How do you pass each partner's portion on if there is a death? 

What zip codes are you going to cover? Will you do foreclosures, REOs, Buy & Hold, Subject To, Fix & Flips, Notes, Tax Liens? 

As an agent, do you get the agency fee? Is the partner interested in a JV or does he simple want to lend money at interest? 

That's a start of what you need to think about.