How to Use a Real Estate Joint Venture to Solve Property Issues
Updated: May 24
Real estate investing typically entails numerous individual goals, making teamwork critical, which stakeholders often overlook in a joint venture. A real estate joint venture is a way for two or more investors to bring experience, expertise, and money together to accomplish more than what they could possibly do individually. In a joint venture, the parties maintain their business identity and independence while working jointly to pursue specific business goals.
A joint venture presents an immense opportunity to property owners or real estate developers. However, they must do their due diligence to identify the right JV partner. Having noted that, not every joint venture is guaranteed to bring immediate success, and it’s essential to learn from past mistakes to ensure that the next venture has a more favorable outcome.
In a joint venture, the critical ingredient is the shared belief among the partners in a common objective. Although the investors might have different ideas to reach their purpose, the essential thing is to move forward together with the same goal. Without that shared vision, a joint venture will encounter challenges along the way.
For example, in a real estate joint venture, you and a joint venture partner can agree to share the costs associated with managing and running a property, and other expenses, thus reducing the financial burden. An investment company like Brownstone NYC (BYNC) can help property owners and investors across New York City. Each transaction handled by BYNC is designed to serve the interests of the JV stakeholders.
Unique Reasons to Joint Venture While joint ventures are typically brought about by a mutual desire to make the best of what each party has to offer and make a profit, there are other unique reasons why many people come together. These include issues such as:
Couple got divorced (yet some properties are jointly owned)
Estate (Parent dies, and kids have to sell the property or don’t agree on what to do with the property. Some may want to develop the property to earn more while others want to sell it as is).
Medical needs (one parent needs elderly care, but the home is the only asset)
In such situations, a couple may need to continue jointly owning and running a property such as a house. As a vertically integrated business BrownstoneNYC takes pride in assisting individuals to overcome real estate investment challenges like the ones mentioned above. They have the ability and will to serve all stakeholders in the New York City community.
BYNC has experience with running and managing residential/commercial real estate across New York City. The current strategy in areas such as Brooklyn NYC, Greenwood, Bedstuy Iverson, and Greenpoint is to do gut renovations with the goal of resale. We also provide rentals in the larger NYC area, Long Island, Westchester County (Mt. Vernon). Many of these properties are joint ventures.
What is a Joint Venture Agreement?
When you decide on a joint venture, it’s imperative to write a JV Agreement that sets out the terms and conditions of the undertaking. The Agreement helps in preventing any future misunderstandings once the venture is up and running. Other agreements may also be needed, such as a confidentiality agreement that protects any commercial or business secrets you might disclose. Getting independent and expert advice from real estate experts like Brownstone NYC might be a prudent move in such undertakings.
A JV agreement must detail when and how the joint venture will end. It is usually in the interest of both parties to dissolve a JV as economically as possible without, for example, incurring legal fees and seeking court resolution. The JV agreement must also detail all the events or circumstances that might allow either parties (or one) to trigger a premature JV dissolution.
The management team and advisers at Brownstone NYC have over 100 combined years of experience as real estate professionals. They can help you with issues that affect your jointly owned real estate property.
How do Real Estate Joint Ventures Work? There is not a single standard JV structure that can be used in the real estate industry. Instead, there is a full range of options that are being successfully used, including unit trust, limited partnerships, REITs, and incorporated limited liability channels. The JV structure choice depends on several factors, including:
Tax treatment applied
Stage of development of that real estate asset
The type of investor(s)
Breadth of the investor base
Management structure to be used.
Whether there is a dispute or not, a party to the joint venture may wish to dispose of their interest in the undertaking. By partnering with Brownstone NYC, we can help renovate and sell the property at a better price. If you decide to terminate the real estate joint venture or have settled, Brownstone NYC can help you dispose of the assets. A vertically integrated real estate company, Brownstone NYC can also assist with:
Foreclosure or avoiding-foreclosure
Renovating a joint property
Sales/Rentals for the joint investors
In any of the situations above, BNYC gives you the option of deciding whether you want to be directly involved in the management or to leave everything in the hands of their professional team. BNYC has in-house experienced property managers and a highly qualified asset management team. They do more than just simply coordinating tenant repairs and rent collecting. The BNYC team provides professional real estate investment advice.
Ending a Joint Venture
Although a JV may adjust or adapt to the new or emerging circumstances, sooner or later, most partnerships come to an end. Similar to any partnership, with a joint venture, at some point, you may find that differences or conflicts between the parties arise. If the real estate joint venture had been set up for a specific reason like divorce or a jointly-inheritance house, it would come to an end when you settle the differences/disputes.
You may, for example, decide to sell the property, and that is where partnering with real estate firm like BNYC can be profitable. They can help you sell the property profitably for mutual benefit.
Fully licensed and insured, Brownstone NYC is a professionally run real estate development and investment platform. If you are interested in knowing more about how this family-owned business can assist or collaborate with your joint venture, don’t hesitate to contact us.