Private Money Partnering

Private Money Partnering Table of Contents
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Partnering And Joint Venture Real Estate Investing.

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Joint Venture Variables To Negotiate

Chapter P

Venture Variables - What You Negotiate

Forms:
Joint Venture Variable Checklist:

Whose Money And In What Proportion?

Basic issues for partners to negotiate.

Will The Deal Person Be Paid Up Front?

It costs money to find something and to manage as well. I have structured arrangements as a deal maker where sometimes I receive money up front, and sometimes not. And that will vary,
depending on the objectives of the partners.

Who Gets A Positive Cash Flow, And In What Proportion?

As a managing partner, could I take all of it, if there is any, or does it get distributed? When, and in what proportion? For instance, if you have the management responsibility for a multiple unit, you could turn that responsibility into a benefit for yourself. If you install a Coke machine or washers and dryers or telephones, you could retain the income from those additions. Again, it's all up to you.

When And How Will The Cash Distributions Be Made?

Will it be every six months, once a year, once a month?

Who Handles The Negative Cash Flow, And In What Proportion?

This varies by property, it varies by partner, it varies by deal. There might be negative cash flow that you sure didn't expect. Will one of the partners benefit by having a negative cash flow?

How Are Non-Capital Contributions To Be Rewarded?

How and when will the deal maker be paid? We're talking about time, experience, those kinds of things. Money is not the only component.

Who Makes The Decisions? About What?

My partnership agreements state that my partner and I will jointly decide on the price and the type of holds. I do that even though I know I will be presenting partners with situations which I know they will approve or not approve. I want people to feel they have a stake in the whole. They're going to respect my judgment and ask for my opinions and recommendations.

I structure things that way because I want partners who are involved. I want partners that care. That may be different from an ongoing partnership, where the general partner makes all the
decisions and the limited partner must legally accept the results of those decisions. I have always offered joint decision making opportunities for my partners so they feel they have more invested than just their money. They are contributing because they are always giving ideas, and they have the opportunity and the responsibility to help move the deal along toward closure. We all know nobody likes to give up control, including me. But they always say, "So what do you recommend, Marge?" and based on my experience, I tell them. And almost always that will determine the decision.

Joint Venture Variables to Negotiate - Chapter P