Joint ventures can lead to mega projects that can be very fruitful. Joint ventures are contracts between two or more investors who share the responsibilities and the rewards. All profits, risks, losses and cost is divided among all investors. Such investments are usually short-term. If all parties are happy to work with each other they might get involved in more agreements. In joint ventures, the contract includes all the terms and conditions that are applied to all participants. The solution of all possible problems related to the investors is already provided in the contract.
To-Dos in joint ventures
To avoid any unwanted circumstances, the first thing to be done in a joint venture is to form a new company that is only concerned with the latest project under observation. The creation of a new company gives everyone enough assurance about the project and the initiator’s concern about it. In addition to this if things are not going the way you wanted it to be, one can leave it easily. Another very important benefit of such a tactic is that if things go beyond the repair level the other assets are still protected. If the project fails dejectedly, the lawsuits will not affect the rest of the property and assets. In this way the rest of the property of a real estate investor is saved from the effects of one failed project.
Conducting a joint venture
The size of the deal dictates the fate of the joint venture. All the protection strategy is required when a huge joint venture is being planned that involves a gigantic investment and a heavy expected ROI. If trying to earn a few thousand dollars out of a small deal, no such effort is required. One of the most appealing thing about joint ventures is that the investors are able to connect to people from different industries. People with different skill sets and diverse background with their own amazing experience can be met. Even if only one project is done together still the investors has broaden their experience in the market. Such relationships can benefit a lot in the future deal with others as well.
Growth due to joint ventures
Some people who have felt comfortable and had profitable deals want to work with each other again. In this case an impact is created on the market that really helps in getting projects and enhancing the business. Even if the team doesn’t work together again, the market and the world of business done together and its success.
Up scaling of the project
Joint ventures usually go successful not because of the effort put in the project but because of the people involved in it. Sometimes the project sounds bigger and more reputable due the involved partners. People back the ventures that involve known personalities and if some big gun is involved in the venture, it is surely successful.
Is it worth it?
Everything said above matters, but what matters the most is the performance of the team. If the joint venture is planned with the right type of people according to the nature of the project, it is going to be successful. When people from different backgrounds and diverse experiences sit together they come up with ideas that can prove to be very successful. A successful project with known people involved can be even more successful but it can be the other way around as well. IF some known people are involved in the venture and it does not go that successful or is near fearing failure, it can destroy the reputation all together.