What Are the Different Types of Joint Ventures?

A joint venture property investment or development can happen in variety of ways but some of the most relevant ones are:

Joint venture with a business partner

This is exactly what the name suggests and through this method usually two people form a LLP company and provide the initial equity. Voting rights, share of profits and equity depends on the level of investment by each party. The positive of this method is sharing the risk with one or more partners and the downside is the reduction in profits.

Joint venture with an experienced property developer

This method enables high net worth individuals who want to get into major development projects, to start their development journey with minimising the risk as they use the experience of the property developer. This type of deal is designed to benefit both parties. The developer will use the investors equity and can therefore do more project in any given time and maximise their profits and the investor benefits from both taking a share of the profits as well as being able to build a development CV which later on would enable them to leverage their money and raise development finance. They also benefit from learning the ropes and reducing their risk. This is the most commonly used method as each party has different positives that compliment each other well and roles are clearly defined. This also suits funding partners who have experience in development but using this method, they have a healthy return on their money without doing any of the work and practically act as a lender or a silent partner.

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