Private Money Partnering

Joint Venture Relationships – What’s Important

Chapter G

Forms:
Summary – 43 Project Operating Tasks

What’s essential to make a good joint venture relationship with a partner? What do you really need to have? Well, a joint venture is a bit like a marriage. In any successful relationship you have to have three things:

1. Common Goals
2. Compatible Styles
3. The Ability to Communicate

Those three things. The join venture relationship is like a marriage, and you sure don't want to get a divorce. A joint venture relationship is also a liaison, and you don't want to make it a “liaison dangereux”… a dangerous one, as in the movie. So, let’s find out about what you need to know about your partner.

First of all, in what light are you going to look at the other party? How important are they to you? Some of you may have heard of Ron LeGrand’s concept of the mouse and the elephant. The mouse is the one who scurries around and finds the deals and does the work, and the elephant is the one with the money. And money is essential. But, how big is the elephant in comparison to the mouse? When you need both the deal and the money, it may be more like putting together peanut butter and jelly, or bread and butter, or other equally valuable components. In other words, you need both. Both parts of it.

The active or operating partner on a deal may feel that his or her contribution is far more valuable because of the unique knowledge and skills necessary to make a deal happen. You can see on the “List of Tasks” the tremendous number of activities which an operating partner handles. Are these activities mouse-like in comparison with importance of an elephant’s money?

On the other hand, if you and your wallet are feeling truly elephantine, and you dismiss the value of the Summary – 43 Project Operating Tasks, you may have difficulty finding someone with a deal who would want to partner with you. That’s why it’s very important to see things from your partner’s perspective, an essential part of communication.

Summary – 43 Project Operating Tasks

Secure Property
-obtain leads
-inspect properties
-evaluate rental and sale market of neighborhood
-negotiate contract with seller (sale, lease, or option)
-prepare and complete closing

Analysis
-estimate procurement costs
-estimate bolding costs
-estimate repair costs
-estimate resale and profit/yield potential

Renovation/Repair
-design renovations and decor
-prepare budget
-prepare cash flow expenditure
-obtain funding
-prepare punch lists
-prepare work schedule
-obtain bids
-evaluate bids
-elect venders and negotiate work agreements
-hire workers
-purchase materials
-supervise work
-maintain expense records

Rent
-inspect property
-ready property for future occupancy
-prepare rental advertising
-screen interest prospects
-show property
-evaluate candidate applications
-conduct/purchase credit report
-negotiate lease terms
-negotiate option terms if required
-collect rents
-(pay mortgages)
-evaluate repair needs as requested/seen
-obtain and supervise repair people

Resale
-obtain appraisal
-determine market price
-advertise for buyers
-qualify prospects
-negotiate contract
-assist prospects in obtaining financing
-facilitate the closing
-prepare year-end data for the IRS

Evaluating The Money Man / Money Momma - Chapter H