Joint Venture Funding: A Beginner's Guide

As a budding property investor, you are likely well clued up on the industry and have some great ideas and that all-important growth mindset that is essential for success. There is just one sticking point though – you don’t have the funds to hand to put your ideas into action. That’s where joint venture funding can help. But what is joint venture funding and how can you attract suitable investors? Here I will cover everything you need to know to get started, including building your brand, finding potential investors, and how to create a joint venture agreement.

Table of Contents

What is Joint Venture Funding?
Why Joint Venture Funding is Ideal for Investors Without Capital
Building Your Brand for Joint Venture Success
How to Attract Investors to Your Joint Venture Online
Where to Find Joint Venture Investors
Understanding Joint Venture Agreements

What is Joint Venture Funding?

Joint venture funding is when two or more individuals or businesses team up to pool their resources and work together on a project, in this case, property investment. Joint venture funding can be a good way of accessing funding, specialist knowledge and expertise, and important connections that can help further the project. The parties involved all have their responsibilities towards the project which are outlined in a joint venture agreement – we will talk about this more later.

Why Joint Venture Funding is Ideal for Investors Without Capital

Taking part in a joint venture to begin your journey in property investment is a great way to get started without needing substantial personal funds. Leveraging partnerships, and using other people’s money and your expertise allows you to take advantage of investment opportunities and can result in success for both parties. The costs and risks are shared, but so are the profits.

Here’s a practical example of a joint funding venture:

Steve is a property investor with the skills and expertise needed to manage the entire process, including finding suitable investments and overseeing the sale of the developed properties. However, they need more capital to fund the project.

James is a high-net-worth individual who has the financial resources but doesn’t have the time, expertise, or interest in managing a property development project. James however knows that investing his money in such a project would be a wise choice and give him more returns than keeping it in a savings account.

In this joint venture, James provides the capital to purchase properties. At the same time, Steve handles all the operational aspects, including project management, obtaining planning permissions, hiring contractors, and marketing the completed properties.

Once the project is complete and the properties are sold, both parties agree to share the profits according to a pre-established agreement. For example, they might agree that after covering costs, the profits will be split 50/50, or Steve might receive a larger percentage if they also take on more risk or responsibility.

Building Your Brand for Joint Venture Success

You can’t just expect people to part with their cash just because you ask – you have to build a credible brand to give people the confidence to invest in your project. This can be done both online via social media and the internet and offline at networking events, business expos, charity events and more. It pays to be consistent in your brand building, putting time into creating and building those business relationships and displaying your value. Consider creating profiles on social media such as LinkedIn, participating in online discussions, and establishing yourself as a thought leader in the industry and someone who would be good to work with.

How to Attract Investors to Your Joint Venture Online

Building a credible brand online can help you reach and engage with the right audience, showcasing your ideas and generating interest in your joint venture. You can create engaging online content to share with your audience by:

Create posts about your joint venture, outlining the business plan, the value proposition, and your unique approach to property development (or any other past venture). Post stories about previous problems you have faced and unique solutions you’ve implemented.

Documenting your current projects from start to finish with some high-quality videos and photos. This offers potential investors a visual understanding of what you do as well as proof of your work.

Participate in relevant online forums, LinkedIn communities and Facebook groups for entrepreneurs and other property investors. You can share knowledge and promote your own work – remember, avoid hard-selling your project and focus on contributing value instead.

Stay consistent with your content updates and continue engaging with your audience and peers online. Commit to sharing content once a week or however often you can commit to, and always respond to comments and messages from people, demonstrating your dedication and professionalism.

Where to Find Joint Venture Investors

Make valuable connections and cultivate relationships with potential investors offline by attending local and national business events, property networking events, angel investor events and other similar places. Again don’t go for the hard sell right away – take some time to get to know people well first, considering their value as a potential joint venture partner, how willing you are to trust them, and if you get on well as individuals. Again they will need time to get to know and trust you before they will be ready to enter into a joint venture project with you.

Understanding Joint Venture Agreements

A joint venture agreement is a contract that both parties enter into to work together on a project. This agreement will detail the rights and obligations of each party, reducing the risk of any disagreements further down the line. A joint venture agreement could include:

The purpose of the joint venture including the project’s goals and scope
The contributions of each party
The roles and responsibilities of each party, e.g. day-to-day management, decision-making authority, and operational tasks
How decisions will be made within the joint venture
An outline of how profits and losses will be divided between the parties
An exit strategy and termination clauses

Many joint venture participants will set up a Special Purpose Vehicle (or SPV) such as a limited company so that any liabilities will be those of the company and not the individuals involved personally.

Before you go …

Joint venture funding is a great way to access the funds required to start your property investment journey and achieve your financial goals. To find out more, join me, Liam J Ryan, for one of Assets For Life’s FREE property events – click here to sign up.