How Does Each Partner Benefit from a Joint Venture?

Traditional joint ventures aren’t always so black and white, in that each partner brings one or more of the essentials to the table, expecting a relative benefit. In the most distinguished sense of the roles, you’ll need an equity investor, a property developer and / or a landowner.

In summary, what are the advantages of a joint venture?

For an Investor?

• Diversification: Being partially responsible for raising the full amount of equity augments the ability to diversify your investment portfolio. 
• Low Cost & Low Risk for High-Returns: Pooling a portion of your investment equity together with multiple private investors grants you opportunities to fund larger projects in the primary market, with higher-returns that are usually reserved for the super-wealthy.
• Light-handed: Time saved from sourcing, researching and getting your hands dirty.
• Fully assessed: Due diligence conducted by professionals.
• Safeguarding: A comprehensive protection plan, to thoroughly analyse a developments feasibility and ensure that the schedule is adhered to.

For a Developer?

• Carpe diem: Never miss an opportunity, if a developer or landowner doesn’t have the equity to get a project off the ground at the time it is needed, they can get 100% joint venture development finance without having to dip into their own pocket and still walk away with up to half of the profit. 
• Double-check: A post-check will be performed by a professional investment analyst in a full research process of due diligence, to verify the feasibility of your scheme. 
• Legals: Depending on the kind of partners you choose and responsibilities that are set, you could avoid touching any paperwork. The team here are JaeVee deal with all of the invoicing, expenses and VAT returns for the SPV we setup. 
• Sales & Marketing: With a larger team, you will be able to reach more people and it may even contain property marketing specialists who are experienced at creating a cost effective strategy to reach the target audience. 

JaeVee spent two years developing a systemised approach to mitigating the challenges and disadvantages of embarking upon a joint venture for property development projects.

Our joint venture property crowdfunding platform solves the main issue of finding joint venture partners, whilst providing everyone a seamless project workflow to manually analyse a development's feasibility, before launching it on the platform for equity investment at the click of a button. It’s also configured to safeguard that the schedule is adhered to, proven by regular updates.

Here are the most common disadvantages of joint ventures, some of which are alevitated by property deal sourcers and facilitors like JaeVee: 

Overview of the advantages of a joint venture

Low risk access to new markets & networks

You can experiment and expand far more comfortably when you have an industry expert on your side.

Joint ventures are especially useful to make sure you’re not going in blind if you want to expand into a new area.

Creating a JV partnership is great for expansion with the peace of mind that all local logistics and regulations are taken care of by your local experts.

All new expertise

A joint venture offers a great opportunity to expand upon your partner's specialised knowledge.

You can increase your technical expertise while offering them your own. Joint ventures enable you to gain access to new staff, equipment and capital.

Joint venture partnerships can even help you understand how to utilise new trends inside the industry - for example, joining forces with a proptech company will help you get on board with industry growth and help you revolutionise your property development brand.

Two - or more - heads really are better than one!

Flexible

A joint venture can be hyper-specialised with a limited lifespan. So you don't need to worry about an extensive commitment - when you and your partner create your SPV together, it will be a separate legal entity created in order to fulfil a specific, time limited purpose and isolate financial risk.

This means that your partnership will be time sensitive, and easy to exit should the need arise.

Further meaning you can enjoy fantastic flexibility with reduced risk.

But if you love your partnership, you can use it to build great long term relationships between your companies.

Win win!

Synergetic

Great partnerships bring the best of both businesses. Great things can come from the combination of company cultures and ideas, but there's more!

Joint ventures bring in financial synergy that lowers the cost of capital.

They also bring operational synergy that makes everything efficient.

Increase your customer base

You’ll be able to market your property development to a wider customer base thanks to your joint venture partner. You’ll each benefit from being able to offer your partner’s services to your own existing customers.

It’s a win-win for both of you!

Build up your brand

Collaboration creates increased credibility. If you're just starting out, a well known and respected brand for your joint venture will prove that you're one to watch.

Joint ventures are a great way to gain trust from locals, potential customers, and industry insiders.

The best part is that increased credibility = increased market visibility.

You’ll be in it together

So, you’ll be sharing talent, industry know-how and expertise.

If that’s not enough for you, you’ll also share the costs and responsibilities. Should the worst happen, this means you’d share the losses and the costs of failure too.

But don't be pessimistic.

A joint venture lowers your risk. This gives you more opportunity to explore the market and expand your property development business.

Best of all, you won’t have to worry about finding the money all by yourself.

Bonus - Joint Ventures are especially popular for building international relationships. This is the ultimate way to expand your market area, and allows you to cooperate with different cultures!

To inquire about creating a partnership with JaeVee, contact us to chat with one of our friendly advisors.

Please note this blog post is not to be considered as investment advice. We recommend you seek independent financial advice and conduct your own due diligence before making any investment.