How does a joint venture work?

joint venture property

Initially we would meet with you to discuss your and our objectives. We would agree the geographical location we will invest in, scope out which strategy we will pursue, which could range from a simple buy-to-let strategy, HMO (homes of multiple occupants), commercial conversion or development, specification of the property we wish to invest in, the timeframe we will work to, and agree multiple exit options covering all eventualities.

We believe that the key to a successful joint venture is having aligned values and objectives, so we pay close attention to making sure we are a great match for each other.

Roles and responsibilities for both sides of the joint venture would be agreed up front so that everyone is absolutely clear of their accountabilities and what needs to be done when.

Once we have agreed the above, we would then formalise this into a legal document which we both agree and sign.

Once the various parties have agreed to set up a JV, they will set up and register the SPV (special purpose vehicle). The SPV is usually a private limited company created for one purpose and one purpose only. For example, depending on our agreed strategy, this could be one property project/development, a series of developments, or the conversion of a commercial building into apartments.

The relative shareholding of each party will entitle the shareholder to a percentage of the profit generated by the SPV either on an ongoing basis or when the development is completed and the properties are sold. Depending on the extent of the joint venture partnership, the SPV will either continue and could incorporate additional properties/projects or when the project is complete, the SPV is wound up.

At this point we would then get busy, and get the project underway, sourcing and negotiating the right property, scoping out schedule of work, agreeing the budget and exit strategies and then operationally delivering the plan.

Joint ventures are a great way for both sides to  benefit from what the other party brings to the JV. So let’s get cracking!