Things to Look for While Going for Real Estate Joint Venture
by Paul Wright Tax Accountant Toronto - A Simple Checklist for ChAfter a considerable downslide the real estate market is now looking up in
most parts of the globe. However, real estate business requires adequate
finances and many agencies are now opting for real estate joint venture as
it provides one of the easiest ways of getting a project financed. The joint
venture can help create high quality projects and attract top class tenants.
But it is also necessary for the main partner to take care of certain aspects
in the process.
Ensuring the Terms to Work
It is not only necessary entering into a joint venture with some good
quality real estate investment companies but it is necessary
ensuring that the terms and conditions set up works well and accurately. They
have to understand all the details and know exactly how well the terms are
going to work for them. This means that the enterprise has to study the
economics and implications including taxes and others involved in the process.
Taking Care of Exit Strategies
It is not only the terms and conditions of financing but the main developer
and their joint venture partner should also agree upon the exit strategies so
that how and when one would exit would be precise. It won’t be the best of
experiences to find the joint venture real estate investors suddenly
making their exit from the project leaving the developer high and dry. An
example is when the developer wants to hold the property for longer duration
but the partner wants to sell it away quicker there could be serious conflict
of interests.
The Decision Making Power
It is the decision making power that is crucial for the success of any of
the real estate development companies and their joint venture partners. Usually both will
like to hold the reins and that is why it is necessary specifying them ahead of
time. It won’t be beneficial for the developer if the joint venture partners
hold absolute control on all aspects including the individual leases as well as
the required repairs. It does not mean that all decision making powers can vest
in the developer since it could be against the healthy interest of the joint
venture partner.
Reporting Requirements
One of the aspects that cannot be overlooked in the real
estate joint venture is the reporting conforming to and strategies build to
suit commercial real estate. Joint
venture partners would require financial reports and may have some specific
requirements like the format of the reporting and software used. Developer has
to cater to these requirements of the joint venture partner to win their trust
and goodwill.
But the most important aspect of a real estate joint venture is to understand properly the economics involved in the
partnership. It is essential striking fine balance between the benefits to be
accrued upon the developer as well as the joint venture partner. It is
therefore necessary developing a deal that would render the partnership
beneficial and not burdensome for both the parties. Using services of an expert
agency in striking the deal can be the best solution for the developers and
their joint venture partners.
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Created on Mar 9th 2018 00:24. Viewed 528 times.