Joint Ventures are like a good potluck dinner

by Russell Westcott on October 10, 2012 in blog with No comments

Investors often ask me questions about what makes a good joint venture. Is it the money partners? Is it a well-written JV agreement that protects the interests of each party? What about the amount of money involved or the kind of real estate investment property the deal is based upon?

The answer is complicated—and incredibly simple.

It’s complicated because every JV is the sum of its parts. It’s simple because every time there’s a problem with one of those parts, there will be a problem with the JV.

That’s why I like to tell people that a good JV is like a good potluck dinner. It’s great to invite a lot of people to the dinner and then hope it all works out. But who does that? If I want to make sure my potluck includes everything from the main course to side dishes and dessert, I’ll plan it that way!

When people ask me questions about why JVs go bad, I always try to “look behind the curtain.” That’s an expression REIN members use to remind themselves that a surface view of the issue is never enough. In this case, I use that approach to zero in on the fact that this individual probably has a very real problem with a very specific JV.

For example, people who want me to talk about problems with money partners often have some trust issues with their existing or would-be partners. Those who want to “blame” the JV agreement likely skipped that step or, with hindsight, see that their agreement doesn’t do what they now want it to do. Ditto for questions about money or buying the wrong property. If your investment ties up the last $20K your partner has, or you buy a property that can’t cash flow and/or can’t attract and maintain tenants, you’ve got a problem!

Fortunately, JVs, also like potluck dinners, are not rocket science. A great potluck dinner takes planning—and so do successful joint ventures. And there’s no need to re-invent the wheel. Ask yourself: Do I have all of the money I need to buy the property I need to realize my Personal Belize? If the answer is No, your next step is JV education.

For a lot of new investors, as well as experienced investors who want to fine-tune their strategies, the education quest begins at home with books like Real Estate Investing in Canada, 2.0, or Real Estate Joint Ventures: The Canadian Investor’s Guide to Raising Money and Getting Deals Done. Others take REIN’s home-study course, Joint Venture Secrets, which includes informative CDs you can listen to at your own convenience >> click here for more details.

Can books and a home-study course really help? Absolutely. These tools cover everything from why JV money is so important, to how you find money partners and avoid partner pitfalls. Real estate investors aren’t born knowing how to analyze revenue properties or assess prospective partners. But these are sophisticated investor skills you can learn—and then polish with experience.

That experience is also available through organizations like REIN, which provides its members with exceptional opportunities to learn from industry giants and investor peers. For more on the topic of what you can learn from your peers, check out my next blog, Standing on the Shoulders of Giants.

About the Author

Russell Westcott: Canadian Real Estate Investor, Educator, Researcher, & Best-Selling Author. He is the Vice President for the Real Estate Investment Network™ (REIN™), Canada's leading Real Estate Education program. Visit for more information

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