You’ve been developing properties for years. As the owner of a property development company, you’ve always been lucky about making smart choices when it came to developing homes in areas where they were wanted and needed.
Lately, your sales have been going down. You built up a large number of homes in a rural area, but it seems that most people are moving to the other side of the town. While your residential area might fill eventually, the fact is that you went all-in. You have hardly any working capital, and you’re struggling to keep up with your expenses.
That’s when a colleague stepped in and suggested working together on another venture. By working together, it would give you the opportunity to continue financing your work and expanding your business. They would take a cut of the sales of the properties you already have built as a way to sweeten the deal.
If this is the kind of partnership that you are looking to get into, then you may want to talk to your attorney about putting together a contract and joint venture agreement. You’ll both be working under your company names, which means you won’t need to merge. Additionally, since your property development business is a bigger name in the industry, your new partner will get the kind of marketing that they want for their smaller construction company.
If you and your potential partner have worked out the details, make sure you both have your legal teams look over your agreement before you sign. Joint ventures can be a great way to help a company that made a misstep or to improve another’s visibility in the market, but there are risks. Your attorney will talk to you more about setting up a contract and quality joint venture agreement.