What Each Partner Brings
If you have the great deal, the things your joint venture partner may bring to your relationship could be a partial or full down payment and the ability to jointly or fully qualify for the mortgage.
If you get into this business, you buy 2, 5, 10 and as you start getting 4 units, 5 units, 11 units you start reaching what we call caps free, you can't get anymore units. The banks will no longer loan you any money to buy more real estate unless you have a super cash flow and very high equity.
As long as that was not the case, you have to start working with joint venture. People we know work with us and other partners, give them good deals and we share the profits - 50:50, 60:40, 70:30 whatever the profits there is, we love to share with other people. The only way to get you grow from 0 to 30 or 0 to 60 units is doing or working with other people in joint venture.
We have talked with a mortgage broker. We ask the mortgage broker about joint ventures specifically. There are a number of ways you can join joint ventures.
You can join joint ventures where two people have titles and two people are in mortgage which is a traditional joint venture. You can do those as many as you can conceivably as long as it makes 10% over its cost. Example for a dollar you spent, you are making or earning $1.10 - a 1:1.1 ratio. Your property is doing it at the same time you are making deals as many as possible.
In other cases, as long as everything is disclosed and your mortgage broker what they are doing (mortgage broker are not created equal neither are lawyers or real estate agents or joint venture partners), people can choose to be on title and/or the mortgage.
In some cases, the people who are providing the down payment are giving 100% security to the people that are on the mortgage or in title. Those are the people that are being protected because they are putting their money at risk more often. Those are the scenarios that you need to prepare for.
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