Real Estate Partnership and Joint Venture Forms - Real Estate

How to Profit With Real Estate Partnerships Joint Venture Agreement

It is common for a group of people to pool in money and jointly purchase realty. This kind of joint venture helps people in many ways- the primary benefit being that they need to contribute only a portion of the purchase price of a property, rather than finance it entirely. By pooling resources, people are able to put down a larger down payment, have stronger financial statements, and share greater experience.

There are many methods that are involved in a real estate business partnership. The following are the different kinds of real estate partnerships that you can choose to enter into:

  • Real Estate Investment Trust (REIT)
  • Tenant in Common (TIC)
  • Limited Liability Partnership (LLP)
  • Limited Liability Company (LLC)
  • Limited Partnership (LP)

The LLC is generally the most preferred partnership as far as real estate relations are concerned. An LLC gives liability protection and management flexibility to its owners. Partnerships usually work best when all sides have similar investment goals, some level of experience, are not dependant on the income to live, and have thoughtfully planned out an adequate partnership structure.

Before plunging into property investment with a partner, it is essential to have a detailed real estate partnership agreement. Trust between partners is vital and can be established and reiterated through consistent auditable reporting, as well as regularly scheduled meetings and communication. Drafting a written operating agreement as an investing group is the best way to achieve success in your partnership. Here is a list of important clauses that you should include in your operating agreement:

  1. 1) Goals of the company
  2. 2) How partnership will be allocated
  3. 3) The initial contribution of its investors
  4. 4) Nature of the entity-LLP, LLC, LP, etc.
  5. 5) How decisions will be made
  6. 6) The kind of development that will be carried out on the property
  7. 7) Who, if anyone, will be the managing partner and what his/her term, duties, responsibilities, compensation, process of removal, etc. are
  8. 8) Details relating to tax matters
  9. 9) Allocation of profits and losses
  10. 10) What will happen upon the death of partner
  11. 11) How disputes will be resolved

It is important to keep in mind that investing in real estate, whether alone or as a part of a partnership, is risky, unpredictable business. Getting involved in a real estate partnership may appear to be a safer route, but it is essential to have mutual trust and understanding amongst the investors.

Tips for Preparing Real Estate Partnership and Joint Venture Forms

Real estate deals are one of the most difficult processes because of insignificant property details that most don’t know to even think about. Let’s dive much deeper into some specific conditions and simplify the process of work with real estate forms with the following tips:

  1. Double-check the rights of both parties. Ensure that all the parties have necessary capabilities to administer property before drafting a document.
  2. Use state-specific real estate contracts. Rules for documents vary from state to state. Get the suitable Real Estate Partnership and Joint Venture Forms form in our library that includes more than 85 000 frequently-checked legal templates.
  3. Determine all desired time frames. Bringing a Real Estate Partnership and Joint Venture Forms into force is usually a stumbling block which leads to lots of misunderstandings and lawsuits between parties. Make starting dates clear from day one.
  4. Record residence condition. Make photos or describe in writing the state of a house or apartment and check if everything is in order on the particular date of releasing it to the another party.
  5. Take advantage of modern technologies. Save time using the built-in integrations with a professional PDF editor and superior eSignature solution. Benefit from our Premium subscription to prepare, check, revise, and put your signature on your sales agreements with no printing, manual filling, or scanning hard copies.