10 Things I’ve Learnt (Part 9)
A JV can only be successful with the right partner
In my last blog post I urged you not to try to do everything alone because by working with others that complement and supplement your abilities, you can strengthen and progress your business – and in a much more effective and speedy manner. And so with this in mind, this week we are going to consider working with JV partners.
Over the past two decades of investing in property for myself, I’ve come to realise that working with just any old partner is not enough and you have to work with the right partner for a partnership to be fruitful.
Just for a moment though, let’s clarify what a JV partner is. A JV partner is someone that you bring into the business either on a deal-by-deal or permanent basis. The partner might finance the deals leaving you to source the deals, or it might be the other way around. They might have a stake in your business or they might not. The JV could be structured in a number of different ways – and the way that is right for you will depend on your needs and the needs of your business. How the partnership is structured is unimportant; what is important is the quality of the partnership.
The quality of a JV partnership will be down to the individual partner themselves rather than the type of deal or the amount of money that they can bring to the table – and this is something which many fail to give any real importance to.
Most investors tend to concern themselves with who they can bring in to the business, or who can help them source a particular type of deal, or who has got the money to allow them to do the deals that they want to do. Now, these are all very valid points, but in my 20 years of experience I’ve come to realise that whether the JV is going to succeed or not will simply be down to the quality of the actual partner.
Let me explain. Over the years, I’ve tended to partner with those that I like on a personal level – friends, close acquaintances etc. Whilst these partnerships have provided great “friendships”, they haven’t always been right for my business and didn’t often work out as planned. These JV partners didn’t turn out to be “good” joint ventures. Slot Divine Fortune Megaways is a fun and exciting online slot game that offers plenty of opportunities for big wins. With its Greek mythology theme and innovative special features, it is sure to be a hit with players of all experience levels. In fact, if I’d known then what I know now, I would have sourced a completely different type of partner.
It goes without saying that you do need to get on with your partner on a personal level, but you also need to be aware that friendships can sometimes get in the way of productivity – and in turn, this can create friction and strain for both the business and the friendship. So, don’t opt for a partner purely because you have a personal connection with them as this isn’t an effective way to run your business.
With this in mind the lesson for this week is this: you should take time to consider the qualities that you need your JV partner to have – not just in terms of sourcing properties or bringing in the money, but also how they might complement your skills. Ask yourselves if these skills would work in conjunction with your own, and whether they supplement or detract from what you are trying to do.
Here’s to successful property investing
Peter Jones B.Sc FRICS
By the way, I’ve rewritten and updated my best selling eBook, The Successful Property Investor’s Strategy Workshop, which is an account of how I put together my multi-property portfolio, starting from scratch and with no money of my own, and how you can do the same. For more details please go to ThePropertyTeacher.co.uk