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Things To Look For While Going For Real Estate Joint Venture
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After a considerable downslide the real estate market is now looking up in most parts of the globe. However, real estate business requires adequate finances and many agencies are now opting for real estate joint venture as it provides one of the easiest ways of getting a project financed. The joint venture can help create high quality projects and attract top class tenants. But it is also necessary for the main partner to take care of certain aspects in the process.
Ensuring the Terms to Work
It is not only necessary entering into a joint venture with some good quality real estate investment companies but it is necessary ensuring that the terms and conditions set up works well and accurately. They have to understand all the details and know exactly how well the terms are going to work for them. This means that the enterprise has to study the economics and implications including taxes and others involved in the process.
Taking Care of Exit Strategies
It is not only the terms and conditions of financing but the main developer and their joint venture partner should also agree upon the exit strategies so that how and when one would exit would be precise. It won’t be the best of experiences to find the joint venture real estate investors suddenly making their exit from the project leaving the developer high and dry. An example is when the developer wants to hold the property for longer duration but the partner wants to sell it away quicker there could be serious conflict of interests.
The Decision Making Power
It is the decision making power that is crucial for the success of any of the real estate development companies and their joint venture partners. Usually both will like to hold the reins and that is why it is necessary specifying them ahead of time. It won’t be beneficial for the developer if the joint venture partners hold absolute control on all aspects including the individual leases as well as the required repairs. It does not mean that all decision making powers can vest in the developer since it could be against the healthy interest of the joint venture partner.
One of the aspects that cannot be overlooked in the real estate joint venture is the reporting conforming to and strategies build to suit commercial real estate. Joint venture partners would require financial reports and may have some specific requirements like the format of the reporting and software used. Developer has to cater to these requirements of the joint venture partner to win their trust and goodwill.
But the most important aspect of a real estate joint venture is to understand properly the economics involved in the partnership. It is essential striking fine balance between the benefits to be accrued upon the developer as well as the joint venture partner. It is therefore necessary developing a deal that would render the partnership beneficial and not burdensome for both the parties. Using services of an expert agency in striking the deal can be the best solution for the developers and their joint venture partners.
We specialize in multi-tenant and single-tenant commercial properties for retail and medical office. Real Estate Joint Venture, Joint Venture Real Estate Investors, Build To Suit Commercial Real Estate, Real Estate Development Companies, Real Estate Investment Companies.
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