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Work with the top financial intermediary in arranging joint venture equity for your project. We work with owners and operators across the country to help them capitalize their projects with LP/GP equity from institutional funds & family offices.
Joint venture real estate is a hot topic when it comes to real estate investing, but what exactly is a joint venture and when is it the best course of action for an investor like you? We’ve prepared this guide to demystify all of the details about joint venture real estate, including how JV real estate can help you, how to find real estate joint venture partners, a common joint venture agreement real estate investors use, and why JV real estate companies trust Clopton Capital as their real estate broker for finding JV partners in real estate development.
On this page, we’ll answer common and vital questions including:
Many new investors ask — what does JV mean in real estate? In real estate, a JV or joint venture is when two or more joint venture real estate investors work together to combine their resources in order to invest in a property or development. Each of the parties in a joint venture retains their existing business identities, they simply work together to secure a deal for the property in question.
While each party in a joint venture has their own set of responsibilities, those responsibilities can vary on a case-by-case basis. How responsibilities are assigned depends largely on the expertise, resources, and experience of each partner and what they can bring to the table.
The profits of a joint venture can also vary, depending on the agreement made between the individual entities in the partnership. A partnership could split profits 50-50, 60-40, or any other combination depending on the agreed-upon relative contributions.
A partnership involves the formation of a new legal entity, whereas a joint venture involves all parties retaining their separate legal identities as businesses and/or corporations. So which is better joint venture or partnership? It depends on your long-term goals and the type of connection you want with other interested parties.
A joint venture allows businesses or individuals involved to pool their resources and expertise to complete a deal they may not have been able to manage on their own. If you lack the resources, expertise, experience, or skills required, you can work with someone who can supplement your resources to get the deal done and make sure it’s profitable.
Joint ventures are also more flexible in terms of retaining your legal identity, allowing you to keep the connection between you restricted to the joint venture itself.
The advantages of joint ventures add up to shared resources, expenses, and risk, as well as access to additional capital, knowledge, and trustworthiness.
That said, there are some potential drawbacks to look out for when considering a joint venture that is inherent to their structure. These include:
All of these factors make selecting the right joint venture partner in a joint venture partnership real estate venture extremely important.
Wondering how to joint venture in real estate? To get an understanding of how real estate joint ventures can be structured, here are the basic details that we consider standard here at Clopton Capital.
This is the amount of equity that our joint venture partners may be willing to contribute to your project, up to 90%. This means that you as the sponsor need to contribute at least 10% of the equity required (not of the total project). Often the 10% requirement is syndicated out further to private investors.
The average real estate joint venture agreement form should include explicit definitions of how profits will be split, what each party will contribute, what specific responsibilities will be assumed by each party, and any other legal elements that you’ll want in writing before entering into the joint venture. That’s what makes a real estate joint venture agreement doc and real estate development joint venture term sheet so important.
Let’s say that you’re a real estate investor that has limited capital, and you’ve discovered an exciting investment opportunity involving a commercial development you’d like to purchase, refurbish, and reopen. However, it’s in a highly desirable area and you know it will quickly attract interest from other investors. Meanwhile, you don’t have the experience with local regulations you would need to manage permitting and other important tasks even if you were able to secure the property.
Fortunately, you have a relationship with another investment firm that has additional capital, plus experience in getting local development permits. Together, you form a joint venture to purchase the property before other investors and begin developing it to meet your future goals. This is a prime example of the power of a joint venture.
Your capital partners will emerge from the very same entities we make applications for your bridge loans (see here), mezzanine financing, preferred equity (link: https://cloptoncapital.com/preferred-equity-real-estate/), commercial mortgages (click for more info) and real estate private equity under normal circumstances. Many are in parallel looking for commercial property sponsors with a demonstrated record of ROI success to partner with. This inevitably means providing a track record of delivering value for co-investors in partnerships, trusts, corporations, LLCs, Delaware Corporations, and estates; also finding good deals, and executing business plans with astute use of debt. This is important before entering into a JV real estate contract.
So if you are looking to scale up and possibly move away from the friends-and-family type of partnership options, our joint venture commercial real estate funding may be a more consistent, better fit for you. We are looking for prospects where we can see business plans with continuity that will offer future business and availability, providing you with plenty of confidence before you enter into a joint venture real estate contract.
For investors, a joint venture is a great way to combine collective capital and resources to make a purchase or deal happen. Investors use financial modeling to come up with a JV agreement that will help them realize their real estate project, real estate development, or other related investment. JV agreement real estate experts can help JV partner real estate deals happen seamlessly.
The best way to manage joint venture partners real estate investors are looking for is to make everyone’s relationship, contribution, and profit share as clear and explicit as possible at the beginning of the process. You may feel that you have a great relationship with your JV partners, real estate or otherwise, and no legal definitions are necessary, but this is always mistaken. Any experienced real estate investor or real estate developer knows that when it comes to real estate investing, a real estate joint venture proposal should always be clear cut.
Joint ventures are built on the exchange of expertise and capital to create a viable investment in a commercial real estate sector that you might know better than most— all built on a joint venture real estate agreement. (Finding a joint venture real estate agreement sample online is fast and easy). If it’s compelling we are well positioned to make the connection. The process begins with our mortgage brokers implementing pedantic due diligence on your proposition. Then, if it meets our high standards on risk and ROI, we will match you to the joint venture partners that will create the most synergistic value. This is quite painstaking simply because we need to filter things down by such diverse activities as multi-family, retail properties, warehouses, hotels, offices, etc. The bottom line is that if we can find you a fellow buyer with a history of providing capital and comfortable with your specific operational areas, it can make your investment horizon really glow.
Curious about joint ventures in real estate development? In this section, we’ll cover some key elements of a joint venture and a real estate development joint venture agreement sample.
Check out this real estate joint venture agreement sample to get a better idea for how they work:
→ Joint Venture Agreement Template
This sample joint venture agreement real estate investment will provide a clearer picture of what to expect. You can also contact Clopton Capital for a real estate development joint venture agreement template you can use as a baseline.
Of course, as a dependable commercial property advisor, we will be there all the way by your side. Clopton Capital is able to pave a way into capital markets outside of the standard raising of a mortgage; one that you probably haven’t traveled before.
We understand the regulation processes from a professional mortgage broker perspective so if this strikes a positive note with you you’ve come to the right place. Our objective is to bring you a committed real estate investment partner that we have got to know well after 10 years and several $ billion of commercial real estate loan deals concluded. It will help you no matter whether you’re an entrepreneur with a revolutionary investment strategy or an experienced trading expert looking for equity investment support.
Clopton is a groundbreaking facilitator in the commercial real estate markets. This requires us to harness all our commercial lending experience to structure and restructure real estate investor partnerships, as well as to apply our negotiation skills for your benefit. In summary: we look for sustainable partnerships with continued, repeated success. In response, we will match you with partners that can bring genuine enhancement to the partnership, with low to zero volatility, after we analyze the market in both broad and specific terms. If you under-promise and outperform expectations, you have all the makings of an arrangement that will inevitably maximize your shared success. That’s the Clopton outlook and we expect any equity investor client to view things in the same way.
If this resonates with you, contacting us is easy. Start your joint venture application by calling us today at 866-647-1650 to speak directly to a Clopton Capital Loan Officer or simply fill out the “Contact us” form. Either way, you will soon be on the road to quickly and precisely knowing your options in line with your financial needs.
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Joint ventures in real estate are used to combine multiple parties’ funds, resources, expertise, and experience while also sharing risk and any profits. They’re often used to provide joint venture capital for real estate.
Structuring a real estate JV involves a lot of case-by-case maneuvering, as no two joint ventures are the same. Generally, the deal will include details about profit share, capital input, and responsibilities of each involved party.
A partnership involves the formation of a new, shared legal entity, whereas parties in a joint venture can retain their separate legal status.
A joint venture simply means an agreement between two or more parties to work together on an investment or purchase.
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