JOINT VENTURE
A joint venture with Alpha Squared is a partnership with the opportunity to realise the potential of your property with expert property developers.
In property development a joint venture (JV) means an arrangement between two or more parties who cooperate to achieve a common set of goals, outcomes or objectives. It is a structure that is commonly used within the industry and can provide significant value for all parties involved.
One of the most common scenarios involving a JV with a land owner is where one party owns the land and the other develops it to sell for a profit. The parties may negotiate an agreement such that the developer is remunerated based on a profit split paid as a project management fee for completing the project.
This type of arrangement provides the developer an incentive to do their best as their remuneration will be directly proportionate with the amount of profit achieved from the sales of the products.
There is a lot of property that has development potential out there which is owned by people who aren't property developers, or worse the owner thinks that developing is easy. They go out and spend a lot of money on a project that doesn't work or they make a big mistake due to lack of knowledge or experience which ends up being extremely costly. All this can be avoided by partnering with an experienced property developer.
One of the great aspects of this strategy is the land owner keeps their name on title, which is the best security position to be in and the parties will enter into a JV agreement outlining the roles and responsibilities of each party. Usually the land owner will fund the approvals and put up the land for security for construction finance. Alpha Squared, as your development partner will conduct advanced due diligence and feasibility studies to extract the highest profit from the site. We will obtain the development and construction permits by liaising with professionals and council, tender civil contractors and/or builders for construction, manage construction and then finally oversee the sales process to through to project completion.
When we reach the end of the project and sales are made we start to pay everyone back. This is done by the sales of the land lots, units or townhouses. The bank that financed the development is paid back first until the loan is paid in full. Then the land owner is paid the agreed amount for the land purchase. Then the rest of the sales proceeds are split between the developer and the land owner at the agreed profit share.
There are many different permutations and combinations of the project setup that can be discussed to suit the needs of all parties. All documents are prepared by professional property lawyers and tax advice sort by expert accountants to suit individual needs.
At Alpha Squared Property we aim to create a win-win for both parties. Contact us to see how this strategy can work for you.