Most sophisticated and successful real estate investors utilize joint ventures to create wealth at an accelerated pace. Some of the key foundational principles of creating successful joint venture relationships include:
- 1. Systems
It is important you establish a system by which you can duplicate your joint venture agreements over time. This system should not be new but, rather, something that has been tried and tested by others over time. This ensures two important things: first, your system will succeed; second, the system will accommodate every stage of the market.
- 2. Relationships
The backbone of successful joint ventures is the relationships that are established. Within your current relationships there is a very real possibility for a potential partner. With the people you know right now, you have potential access to the money required to buy your next piece of real estate.
- 3. Follow-through
It is your absolute responsibility to follow through, take the action, get the results, and move forward. Truly successful people are those who take 100 per cent accountability for their results, both good and bad. One of the best illustrations of this comes in a quote from Jim Rohn: “You can’t hire someone else to do your pushups for you.”
- 4. Win/win transactions
Help others to achieve their financial dreams and they will have others lined up to do business with you. Quite often you will be putting the needs of your joint venture partner’s ahead of yours. Remember, if you structure the deal properly, the more money your joint venture partner makes, the more money you make - a true win/win deal.
- 5. Sell and negotiate
The ability to raise investors’ capital is a form of selling and negotiating. Once you get competent at the art of listening to people’s needs and determining if you can offer something that can help meet those needs, that is when you become a professional joint venturer.
Selling and negotiating are trainable skills. The more proficient you become at both, the easier your investment life will become.
- 6. Leverage
“Little hinges swing large doors.” This famous quote from W. Clement Stone, who built a billion-dollar sales organization out of the depths of the great depression, is a great illustration of the power of leverage. Within real estate, you can utilize the principle of leverage (i.e. you invest $1, and the bank gives you the remaining $3 for your property purchases) to further your portfolio.
- 7. Your team
Great teams are formed when partners’ skills or assets complement each other. Carefully choose your partners to ensure that they are not bringing the same skill to the table as you are. If you are lacking cash – do not match up with someone who is also lacking cash. Be honest with yourself. Identify what you’re lacking and then find someone to fill that void. Remember, joint venture partners can provide you with finances, properties, credit worthiness or investing experience.