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I posted this in the Business forum, but thought I would also get advice here since this has to do with Real Estate.
Have any of you gone into a real estate joint venture, or been an investor on a project? If so, how did you seek out the partner, and what advice would you give?
I am in search for a joint venture partner or an investor for a resort community, (<300k)and just need some direction on where to start. Any advice would be greatly appreciated.
One of the best ways to meet people interested in real estate developments is to go to other developer's open houses. Whether the developer has put up luxury homes, condos, or even a big rental project they probably will at least here out your ideas. Often such people have a network of mortgage people, builders, sales people, and even bankers. Depending on how risky the project you have in mind sounds you might get any or all the network to listen, but when it comes time for them to put up actual money you are swimming upstream. Risk in NOT welcome right now. Small successes are a lot more appealing than any "grand slam" that could eat up a fortune. Depending on the total capital needed you might be wise to finance things very personally and small scale, so that your track record longs good.
Location: central, between Pepe's Tacos and Roberto's
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Quote:
Originally Posted by ktk9
I posted this in the Business forum, but thought I would also get advice here since this has to do with Real Estate.
Have any of you gone into a real estate joint venture, or been an investor on a project? If so, how did you seek out the partner, and what advice would you give?
I am in search for a joint venture partner or an investor for a resort community, (<300k)and just need some direction on where to start. Any advice would be greatly appreciated.
Is it your project or are you looking to invest in someone else's project?
It is a project of someone else, and looking to invest in this project. The developers are well known, and really great at what they do. I feel that this is a really strong investment deal.
Location: central, between Pepe's Tacos and Roberto's
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Reputation: 958
If you already have the developer and project picked out then I would just approach them with it. Let them know that you are interested in investing in their project and would like to see an executive summary and a pro-forma. The executive summary will be the description of the project and the pro-forma will break down the numbers. These packages should tell you just about everything you need to know about the project. Be sure to do your due-diligence before investing, and make sure that you have a lawyer on your side draw up or at the very least look over the contract.
Just FYI though, when I hear the words joint venture (I am in the finance business) I think of 100% financing with equity participation. It sounds more like you want to be a junior investor on the project.
If the developer is not interested in bringing you on as a junior investor, perhaps you could find out how they are financing their projects and invest indirectly. For example, many developers get their funding from REIT's, hedge funds, insurance companies, pension funds, etc., especially in this day and age of the credit crunch. The reason being that these fund sources are more likely to look at a deal that a bank will not. Not saying that they take more risk necessarily, but because they have different goals they look at deals differently. For example, you would be hard pressed to get a bank to look at any kind of development project finance without anywhere from 30%-50% cash equity into the project. However, with a private equity firm or a hedge fund you could get the same project financed (it has to be a strong project) at 100% loan to cost, as long as you provide some sort of bank guarantee (such as short term life policies) at 50% of the cost and provide a substantial share of equity (true joint venture).
I know it's kind of longwinded and a little off-topic, but I just wanted to let you know that there are other options as well.
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