Developing Successful Real Estate Joint Ventures
by Paul Wright Tax Accountant Toronto - A Simple Checklist for ChIn the real estate industry,
opting for the joint ventures is one of the common practices in case of large
real estate projects. However it is necessary taking care of several aspects in
developing successful real estate joint ventures. People and realtors
aiming to develop such joint venture should understand the basics involved in
the process.
Understanding Real Estate Joint
Venture
What is a real estate joint
venture? It is basically a contract between two parties involved in
developing and implementing real estate projects. One of the parties is the
builder that is undertaking the implementation part of the project whereas the
other one is joint venture real estate investors taking care of the
financial part of the project. Thus the joint ventures in real estate can be
viewed as the business arrangement where two or more parties join hands and
invest their resources for accomplishment of a real estate project.
A Partnership that Works Well
Basically the joint venture
helps the operators in the field of real estate industry to manage and develop
the real estate projects combining with the estate capital providers. Either or
both of the parties can be individuals or organizations offering their
resources and services. Joint venture is a common practice in case of build
to suit commercial real estate because these projects require large capital
investments that often the builders are not able to meet on their own.
How Real Estate Joint Venture
Works
To understand how the real
estate joint venture works one can take an example. A company owns a piece
of land in some part of the country but is not physically located there. But
they want to develop a real estate project there. To ensure that the project is
completed successfully, they approach a local builder or realtor agency to take
care of the physical implementation part of the project. On the other hand the
contract providing company located outstation takes care of the financial
investment part. To ensure that there is no overlapping or confusion, clear
terms and conditions are put in place in the contract defining specifically the
rights and responsibilities of each of the parties in the project management.
Players in the Real Estate Joint
Venture
Successful real estate joint
venture depends
on the players in the venture playing their respective parts with honesty and
dedication. For instance; the operating members of the joint venture or the real
estate development companies assume the responsibility of daily
operations as well as management of the project. Generally such operating
members are highly experienced professionals working in the real estate
industry and they have the ability to source, manage, acquire, as well as
develop the real estate project.
On the other hand the capital
operators or the real estate investment companies take care of
financing a large part of the real estate project or even the entire project as
the case might be. Each player is responsible for losses, costs associated with
the venture, and profits earned. Basically the joint venture is a complete and
separate entity different from other business formats and interests.
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Created on Aug 14th 2018 01:20. Viewed 443 times.