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Joint ventures

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| 20 Dec 2011, 12:21 AM Agree 0

Has anyone here done a successful JV? Any thoughts on where can I go to find a partner, and how hard it is to get a legal agreement in place?
  • Rocket Man | 20 Dec 2011, 02:29 AM Agree 0
    For a good legal agreement I would have a chat to Gavin McInnes, a Brisbane based lawyer who has set up structures for himself in the past and is very well qualified to advise you. You may remember him from The Australian Apprentice which he appeared on a while ago. Hope that helps.
  • strongman | 20 Dec 2011, 03:54 AM Agree 0
    What type of partner are you looking for? Do you have a project and are looking for someone with good income for serviceability or cash to put deal? Or do you want smart money to help you manage a deal? Or do you need someone to source a deal for your money and income serviceability?
  • jon79 | 20 Dec 2011, 05:19 AM Agree 0
    Thanks guys. I'm still at the very early stages at the moment. I don't have a particular deal in mind. I'm just looking for some advice before taking things any further. If I did do a JV I think I'd be looking to put in 50% of the deposit myself, 50% from the partner, and split everything down the middle. Just thought it might be a way to invest in areas that I can't afford by myself.
  • Mick C | 20 Dec 2011, 12:14 PM Agree 0
    **Note- im not a accountant or lawyer- this is just my personal view and experience*** As always- Seek professional advice from a accountant and lawyer.

    From a borrowing perspective - you can def borrow more as you split all cost in half in terms of the banks eyes ( as long as your partner is working as well)

    From a Property investing point of view- It's much easier to grow; as you spread the risk and liabilities btw two - so easier to mange and maintain.

    From a Protection point of view - Some "joint" ventures can turn out ugly especially when

    1. Partnership break up- fights -
    2. Conflicting ideas of where and how to invest
    3. Conflicting ideas of exit strategy and different property investing strategy - One may want to sell when 20% is made, the another may want to keep it for a much longer period of time...etc
    4. Financial stress- if one lose their job- they may want to sell to offload financial stress

    Some or none of the above point may or may not apply to you- just a general tips on VJ.

    Having said that- as long as you structure it correctly from a legal and financial point of view you can avoid the financial lost and headaches should a problems arise.


    1. Set up a set agreement with terms of - exit strategy or when a exit strategy can be executed, right of way clauses ( a common clause i advise clients to add is called a " right of way clause" - meaning if the partner wants to sell her/his part off- the another partners has the right of way to buy BEFORE any 3rd party at a "market" price), another clauses, deposit amounts, how this "VJ will be used- any more property or limit of 1 etc... have everything in black and white.


    Depeding on your relationship- you may want to set up a trust for this Joint VJ. Most couple will not- but it;s a personal choice.

    Trust- Depending on the trust type.

    Determine % of ownership
    When one person sells- don’t need to pay Stamp duty- transfer of “units”
    Tax at a straight 30% company- great if you make over $120,000
    Asset protection

    Can not pass on tax benefits- negative gearing or depreciation etc.
    Tax at a straight 30% company-
    Yearly cost

    Personal names-

    There are two (2) form of contract you can enter; Tentants in Common and Joint Tenancy

    What is the difference between tenants in common and joint tenancy?

    Joint tenancy is the holding of property by two or more persons in equal shares. If one owner dies, his or her share will automatically go to the other partner(s), irrespective of any provisions made in a will. This kind of ownership structure is used most commonly by married couples.

    Tenants in common is a type of co-ownership where two or more people own separate interests in a parcel of land (which may be equal or unequal). The laws of survivorship do not apply to tenancy in common. When one party dies, their share of the property can be left to anyone they like, as provided for in their will.


    Note- im not a accountant or lawyer- this is just my personal view and experience.

  • jon79 | 21 Dec 2011, 12:05 AM Agree 0
    Thanks for that post Michael. Very informative. I have to say the cons look a bit scary to me. It looks like it's a case of finding a partner who has exactly the same goals as you, and then getting everything in writing before going ahead.
  • Brock Chewings | 14 Jun 2012, 02:37 AM Agree 0
    There are a lot of pros and cons regarding pushing through with joint venture.

    1. different skills set- it gives life to the saying that "Two brains are better than one." The more the people that are thinking, the more the ideas and skills will generate.
    2. Access to new markets- joint venture will allow your company to be bigger in terms of clients.
    3. Diversification of Risks- if you will pursue with the joint venture, taking risks will be a lot easier. Why so? Risk are always there. But with many brains analyzing the problems, more solutions will also be generated.

    1 slow decision making- The problem with joint ventures is that you have to consider the suggestions made by the other party. All parties should agree to one unified decision in order to go on with the action.
    2. Shared Rewards- shared risks is equivalent to shared rewards. The reward will be divided also.
    3. Potential for Disagreement- if you will have different objectives, poor cooperation and integration is likely to occur.

  • addicted | 14 Jun 2012, 07:04 AM Agree 0
    There can be problems (as mentioned). Unless there is no way you can get started by yourself I'd look at alternatives (cheaper area, save a little longer, sell your car/other possessions etc) and go it alone.
  • StumpCam | 22 Jun 2012, 03:27 AM Agree 0
    I have three JVs now, one with my sister and two with two of my children, all 50:50 tenants in common. I'm just trying to help them get started on the property ladder. It has caused a big problem when I subsequently tried to get finance for another property for myself however, as the banks all assume I have their debt as well to service, but they only count half the rent of course. It's limited my debt servicing ratio. My broker managed to get finance with AMP who don't apply the same rules to such an arrangement.
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