|
Joint
Venture financing for Commercial Property
Joint venture financing is a means of
structuring a mortgage in order to help you,
the client, maximize cash flow potential.
How? Direct Money Lenders will
"team" you with a private
investor that is in your area and interested
in your specific project. You must
have at least 10% equity invested in the
form of cash and or real equity in order to
qualify
Definition of a Joint Venture:
Similar to a partnership in that it must be
created by agreement between the parties to
share in the losses and profits of the
venture. It is unlike a partnership in that
the venture is for one specific project
only, rather than for a continuing business
relationship.
In this case, the joint venture concerns
commercial real estate and the
lender-borrower relationship. Borrowers do
not always start out looking for partners,
but sometimes recognize the value of sharing
equity over "straight"
debt-financing.
Structured Joint-Venture Financing can be
complicated and is not appropriate for all
projects. Provide us with some information
and we can give you matched list of
commercial real estate lenders and equity
investors.
Important
Factors to be Considered Before a Joint
Venture is Formed
-
Screening
of prospective partners
-
Joint
development of a detailed business plan
and shortlisting a set of prospective
partners based on their contribution to
developing a business plan
-
Due
diligence - Checking the credentials of
the other party ("trust and
verify" - trust the information you
receive from the prospective
partner, but it's good business practice
to verify the facts through interviews
with third parties)
-
Development
of an exit strategy and terms of
dissolution of the joint venture
-
Availability
of appreciated or depreciated property
being contributed to the joint venture;
by misunderstanding the significance of
appreciated property, companies can
fundamentally weaken the economics of
the deal for themselves and their
partners.
-
Special
allocations of income, gain, loss or
deduction to be made among the partners
-
Compensation
to the members that provide services
|
