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Want To Invest In Real Estate But Worried By Inexperience Or Lack of Time?

A Joint Venture Agreement Could Be the Answer

We all know people who believe that investing in Real Estate can lead to Financial Freedom but never actually become an investor. You may be one of those people. The first step is the most difficult to take and easiest to put off; there is always something more pressing or an “expert” (who has never invested themselves I might add) telling you now is the wrong time.

Andrew Brennan is a smart cookie and a successful real estate investor both on his own and with partners. Here he talks about the upside of a Joint Venture Agreement. Please do contact him if you want more information or talk to me if you prefer. Andrew is quite happy to produce actual examples for those who wish to look in to this option for owning an income generating property (or 2) more seriously.

“Want to get the benefits of investing in real estate without the hassles of dealing with tenant issues, repairs and maintenance? Too busy to commit the time to find the right cash flowing property? Not sure how or where to get started with investing? Consider entering into a joint venture agreement.

Joint ventures are a common occurrence in real estate investing today and have been around for many years. Many new and veteran investors use this approach to strengthen their investment portfolio by leveraging other people’s talents or resources to get results. The success of the joint venture occurs when two or more parties bring different skills or resources together to achieve results that couldn’t be obtained individually.

A popular structure for a joint venture agreement is when one party (known as the equity partner) contributes the financial resources required for the property acquisition in the form of the down payment, closings costs and repair funds. The other party (known as the managing party) commits resources such as their time managing and repairing the property along with their expertise in real estate investing. With this type of structure both parties can benefit from the cash flow and mortgage principle reduction while the property is being held. Upon the sale of the property, the equity partner’s original investment is returned to him/her then the remaining profits would be shared equally.

New equity investors within joint partnerships often wonder how safe their financial investment is. Several steps are taken to ensure your money is not at risk. A signed joint venture agreement should be used and reviewed by a lawyer to establish the terms and conditions of the venture. Terms can range from a dual signature bank account being required to manage the financial expenses of operating the property, length of the joint venture, cash flow payments, to buying the other partner out. The equity investor should also get financial updates periodically. Depending on the property and the financial transactions against it updates should be provided by the managing partner every one to three months.

With today’s historically low interest rates the opportunity for cash flow has never been greater. A $45,000 investment in a single family home could return 16% in cash flow annually. Factor in mortgage reduction with your regular monthly payment and the return could be as high as 20%. Do repairs on the property to force appreciation and the annual return on investment drastically jumps to much higher amounts after selling the property. Use borrowed money from a line of credit to make the original investment and the return on investment in infinite!

It’s easy to see why real estate investing has created so much wealth for thousands of people and why joint ventures are used to create win-win situations for both parties.

If you are interested in exploring the possibility of being an equity partner within a joint venture to build your real estate portfolio you can contact me at [email protected]

Andrew Brennan”

This entry was posted on Thursday, June 3rd, 2010 at 7:22 pm and is filed under Investment Opportunities. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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4. Should A Buyer Use The Listing Agent To Buy The House?? | Wasaga Beach Real Estate-Wasaga Beach Homes For Sale-Wasaga Beach News said at December 8th, 2010 at 8:30 pm

   [...] Andrew Brennan and myself were viewing potential investment properties yesterday in Barrie. The day before he had received a Christmas CD from a Real Estate Agent he knew. We discussed how all businesses need to keep in contact with past clients and the various ways of doing this. I explained that personally I prefer to do this by providing (hopefully) relevant information via this blog, a newsletter or in person. Others very successfully take the more social route ranging from Christmas and Birthday cards to client appreciation days. [...]

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