Investor to JV newbies: Consider the money side

“For sure the temptation, just starting out, is to go for the management side of a joint venture, but not everyone has the expertise to pull that off,” said John Beddome, head of McGregor Property Management and a Realtor with Royal LePage First Contact  in Barrie, Ont. “There are lot of experienced investors out there and they’re looking for silent partners with the capital for deals.”

Indeed.

A dearth of smaller multifamily properties for sale in most Canadian markets has renewed investor interest in joint ventures, a way of partnering with a competing buyer and accessing new funds at a time when lenders are adopting more conservative underwriting guidelines for property investor clients.

Increasingly rigid limits on the number of doors any one investor can own and still win financing for new acquisitions is also encouraging industry players to structure their deals as syndicate or one-on-one joint ventures.

That’s opening up a new starting point for first-time investors who haven’t yet developed the expertise needed to bring a deal to fruition and then manage it.

Newbie numbers are also growing as more and more Canadians turn to property investment to better the returns they could get on equity markets. For most the natural starting point is to acquire and manage property themselves.

Often the money role in a joint venture is better suited to that newcomer, said Beddome, counting those partnerships among half of his properties.

“I personally evaluate the quality of a deal based on there being equal benefits to both parties, including the one providing the funding," he said.

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