Realistic JV Property Partners
When you are in property and have built a track record of Professional HMOs, Conversion projects and social HMOs you have many people who reach out who want to join your success. However a JV partner is a relationship and need to understand what they want to achieve. Our goal is to make them safe…This safe means they own the property themselves in the Land registry. Safe also means we have a RX1 that they can not sell out the property without adhering to our agreement.
The JV agreement can be structured in numerous ways.
- Can be a first charge on the property
- The JV partner can buy for cash prior to the refurb then refinance and hold for the long term
- Combination of both
All depends on what the JV partner seeks. More so, to entice we have a preferred rate of 5.5% given to the investor before profit split. Currently we have 3 projects in legals and in the process of planning permission.
We have an abandoned building in which we are making 3 flats
We have a building in which we will refurbish 8 flats. We are buying the building for 222k. The vendor bought the building in 2004 for 240k. It should generate gross 36,000.
We have a shop in which we are converting into 2-3 flats depending on architect. First we are doing the searches and if all ok then proceed with the architect.
As mentioned in the title, need realistic JV partners. Realistic means they have liquidity. Realistic means we meet them and feel comfortable with them. Realistic means realistic return expectations. For example we have a London Gent who wants 20% every 6 months. We explained, that as much as we have sold within 6 months it might not be realistic. More so as we are waiting to sell, we are cash flowing amazingly. On our HMOs that are all up for sale, cash on cash without finance we are anywhere between 12-15% NET. The kicker comes in when we sell. Combining the rents and the capital gains we are anywhere between 25-50% on many projects.
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