Here is a question I’ve been asked weekly and wanted to share a little bit more insight on this subject. What is a joint venture?
It’s type of relationship that is created to match funds required or wanted for a real estate acquisition or development with a real estate capital provider.
A capital member is typically interested in forming a joint venture with an operating member who is knowledgeable about specific markets and/or asset classes, as well as day-to-day management and reporting responsibilities. The joint venture’s operating member typically has the ability to source, buy, debt finance, manage, and/or develop properties in specific asset classes and/or geographic locations, but may or may not be able to provide meaningful money to the venture.
A common joint venture structure is one in which the capital and operating members join forces to form a new limited liability company. The partners then form a limited liability company and engage into an operating agreement (also known as a joint venture agreement).