- The Hidden Benefits Of A Joint Venture Renovation
- Pick The Right Joint Venture Partner
- Clearly Define Roles
- Create A Robust Legal Structure
- Establish Your Modus Operandi
- Build Your Reno Profit Machine
- How We Do Joint Ventures In Wonder Women Renovators Conclusion
1. The Hidden Benefits Of A Joint Venture Renovation
Many renovators aspire to do joint venture renovation projects but finding a partner and navigating the set-up process can be daunting.
In this article, I am walking you through the process of setting up a joint venture renovation. I will bring it to life by referencing a project that two of our Wonder Women Renovators have just finished and sold.
Kate and Suzette have been active members of our Wonder Women Renovators Community for some time now, however, this is the first project they have done together. They embarked on a joint venture renovation project to get greater leverage with their renovation.
They bought this cottage in Mayfield in March, renovated it and sold it in August and cleared $100,000 profit.
A common motivation for seeking a joint venture partner is a lack of money.
Instead of waiting until you have saved enough cash or are able to get an investment loan, you can shorten the process with a joint venture project.
There are however several other reasons you might consider a joint venture renovation:
Build confidence quickly –
It is by far the biggest challenge holding female renovators back.
Teaming up with the right joint venture partner means that you have someone to share the day to day experience,
bounce ideas off and contribute to the decision process.It is a powerful way to overcome this challenge of self-doubt. It is widely known that extremely competent women,
even those at the top of their game in business and government, experience self-doubt.Complete projects even when you are time-poor
Not everyone wants a toss in their job.
If you want to continue to work and still have the opportunity to do projects,
teaming up with a partner who has the capacity for site management gives you the best of both worlds.Kate wants to work full time in a job she loves so teaming up allows her to do that
plus Suzette gets to fulfil her desire to be a full-time renovator. It’s a win-win.Add complementary skills –
Each partner brings a unique skill set to the project, the trick is to team up with partners who complement one another well.
Suzette’s bookkeeping background enables her to competency manage the finances.
Her ability to be flexible also means she can be on-site when necessary.
Kate works full time, her professional project management meant that the planning and execution of the project were skill fully managed in her spare time.
Build a leveraged money-making relationship
One plus one does not necessarily equal two.
Joining forces with a well-chosen partner enables you to get better results than you could each achieve individually.
We attribute this to
- The additional skill set a joint venture partner brings
- The pooling of resources ( time, money, knowledge, contacts)
- The mindset benefits derived from sharing the responsibility of the project.
2. Pick The Right Joint Venture Renovation Partner(s)
You can have up to 20 joint venture partners, however it’s best to keep the number of partners to a minimum. We do however have a project with 14 partners but its not the norm, nor is it recommended. The more partners you have, the more challenging decision making becomes and the more you have to divide up the profit. Choosing the right joint venture partners is critical to the success of the union.
It’s like marriage.
Get it right and you are destined to have a long, happy and profitable relationship. Get it wrong and your life will disintegrate into hell.
Whether you want one or many, make a shortlist of your perfect partner’s attributes.
Don’t just focus on financial capacity, consider skill set, trustworthiness, risk appetite and emotional intelligence.
And don’t dive in too quickly, spend time courting and doing due diligence.
Spend time together, talk ( a lot) and get to know each other
Here are some potential talking points
- Hopes and dreams
- Renovation history and level of competence
- Long term goals
- Skills you each bring to the relationship
- Personal values
- Your attitudes to risk- how you would deal with a loss
- How you each cope with stress
3. Clearly define the roles
Once you have decided on a potential partner, the next step is to figure out how you will work together.
Some people are good team players, others are not so. This doesn’t mean the relationship won’t work, but it does mean you need clearly defined roles and accountability.
In renovating, deciding the design, look and feel of the renovation can be a source of contention so it’s a good idea to delegate that aspect to one person.
Other areas to delegate are:
- Project management
- Site management
- Trade due diligence
- Procurement
- Contract administration
- Property styling
- Property sale
- Property rental
- Risk management
- Documentation
Allocating roles will ensure that there is accountability in all areas of the project and you avoid conflict.
Create a robust legal structure
Once you have decided on roles and responsibilities, the next step is to create the terms of your joint venture agreement.
In the interests of saving time and money, it’s best done before you go near a lawyers office.
If you meet with a lawyer to establish an agreement from scratch, at a minimum of $500 per hour for legal service, it will cost you a fortune.
Instead, nut out the terms including but not limited to:
- Roles and responsibility
- The types of projects the joint venture will complete
- How properties will be sourced
- How and when the profit will be distributed
- How the loss will be distributed
- What happens if one partner cannot continue due to death, divorce of disaster
- How the money will be managed
- How decisions will be made
- How conflict will be resolved
Once you have thrashed out the details, it’s time to head off and has your
- The legal structure set up
- The agreement is drawn up
- Bank account established
Establish Your Modus Operandi
Everyone has a different way of operating according to their strengths, priorities and risk appetite.
While you may be using the same operating system ( we use the 100 reno profit system), you may approach it in a totally different way.
Establishing what options you choose to execute the various elements of your project as a team will become your joint venture modus operandi.
Some renovators love DIY, some like using particular suppliers, some like to stack strategies…
The best advice I can give you here is to choose the path of least risk
For instance, three pillars of our 100k reno system are
- Purchase a property with a minimum 100k profit potential
- Complete a Cosmetic Plus Renovation
- Outsource deal flow to reduce downtime between projects
A point of friction in renovating for profit can be the sourcing of the right property to fulfil these requirements.
If you buy a property with insufficient profit potential or pay too much, it is almost impossible to recover without waiting a decade.
A feature of the 100k reno system is to work with a tried and tested renovation property buyer.
Renovators who embrace this, lower their risk,especially when working outside their local area. They also increase the speed to profit and barriers to success.
Kate and Suzette are extremely pragmatic and are keen to establish a process that is highly leveraged. They engaged a property buyer who not only secured their first project but also assisted them in sourcing trades and a selling agent.
As a result, they had their second project secured within 3 weeks of the sale of Mayfield
Build your Reno Profit Machine
Once you have completed your first joint venture project, It is important to review your processes. By refining your processes and relationships with trades and consultants, the subsequent projects become easier and more profitable.
Having established a reliable cash flow via your joint venture you can turn your attention to other wealth-building strategies and projects.
Suzette & Kate each have other wealth-building projects and activities including Airbnb and investment properties.
Conclusion
Adding a joint venture to your renovation activity can be the source of great joy and profitability.
Choosing the right partner and following a tried and tested process for the legal set-up will significantly reduce the risks.
It is so worth doing, spending a few months establishing the relationship and completing your first project will set you up to have your own reno cash machine.
Joint Ventures In WonderWomen Renovators
Kate and Suzettes joint venture relationship came together as a result of their participation with the Wonder Women Renovators program.
I have spent several years developing a process to enable our women to be able to do joint ventures as safely as possible.
Personally, I am doing my ninth joint venture so the process has been well tested.
The benefits of doing a joint venture in Wonder Women Renovators are
- Access to the 100k Renovation Profit System
- A pool of like-minded, educated renovators women who foster Wonder Women Values to team up with
- A tried and tested process for setting up the Joint Venture
- Guidance to navigate the legal set-up
- Access to a team of reno savvy property buyers
- Ongoing support, coaching and training.
If you would like to explore doing joint ventures in Wonder Women Renovators
You can find out more by
- Booking a seat at our next workshop
- Booking in a discovery call
