Updated: Feb 25
Did the last deal get away because you lacked the funding?
Finding an angel investor to be your joint venture partner could help you spread the risk and make the project more affordable.
So, what is a joint venture?
To put it simply, a joint venture is an arrangement where two or more individuals pool their resources to achieve a common set of goals, outcomes or objectives.
It is a structure that is commonly used in the property industry and with the right joint venture partner, you can achieve so much more than you would on your own.
The benefits of a joint venture include, but are not limited to:
✅ Share and spread the risks with other parties
✅ Greater access to financial resources
✅ Use specialist skills and share knowledge
It can be a very useful and powerful structure, provided all parties know and understand what they are getting into.
Like many things in property, it is important to consider the disadvantages which include, but are not limited to:
❌ Hassle of dealing with the wrong investor
❌ Difficult to exit
Choosing the right angel investor is absolutely key for a successful joint venture partnership.
Here are 5 tips to help your next property joint venture run a lot more smoothly.
1. Skills and experience. Are you both bringing different things to the table? Divide the tasks from the start to ensure everyone knows who is doing what. This should be clear from the beginning and not something that is made up along the way.
2. Communicate clearly and regularly. Good communication is key to all successful joint ventures. Send regular updates or arrange face to face meetings to ensure that the line of communication stays open. Even if there is no news, you still need to keep the investor updated.
3. Aligned values. Make a list of the values that are important to you and see if you see the same in the investor. Having similar values will help you resolve difficult situations. This will form the foundation of a successful working relationship.
4. Do your due diligence. Not all angel investors are real angels so do your due diligence! Look closely at their background. Connect with them on social media and see what they say. Speak to mutual connections to find out what their reputation is like.
5. Exit strategies. Is there more than one exit strategy for the project? Are you both clear on the various exit strategies? Discuss what happens in the worst case scenario.
This is a non-exhaustive list. If you want to know what else you should be considering, drop us a message today.