This episode of Investor Insight weighs the pros and cons of joining forces with other investors for JV deals. It's about more than sharing finances, reports CREW reporter Jemima Codrington.
Video transcript below:
Jemima Codrington: The recent changes to the mortgage laws has seen banks curb their lending. But do investors need to hold their spending. Hi, I am Jemima Codrington and welcome to Investor Insight on Crew TV.
Joint Ventures are increasingly popular in our city as investors find ways around the new lending rules. Partnering up means investors can avoid going to the bank for the loans, but still to see new huge investment opportunities.
Steve Arruda, Century 21 Best Sellers
Steve Arruda: Well the mortgage rules have definitely made buying more difficult for the average investor. Joint ventures allows the individual to actually be a fractional owner in a property. So if you have limited resources, say only a small amount of cash to invest in, using the option to buy a fractional ownership of one property and invest either in large groups or in smaller groups as well. It’s a good way to diversify and also it minimises your risk as well.
Marcel Greaux, Toronto Real Estate Club
Marcel Greaux: The new mortgage rules have primarily affected first time buyers who are actually purchasing with insured mortgages. So that’s why the amortisation has dropped to a 25 year amortisation. As far as investors are concerned, it’s pretty much business as per usual. We still have the 30 year amortisation available, if you are purchasing conventionally.
That being said, the financial climate has changed somewhat and joint ventures are actually a great strategy for mature investors who are looking to grow their portfolio past what current lenders allow you to have within your portfolio.
Jemima Codrington: Doing your due diligence when selecting a JV partner is crucial to the successful partnership. There are some things to consider when choosing a candidate.
Tarik Gidamy, The RedPin.com
Just like with anything else, partnership is one of those things where I believe that mimicking what the other person does is not the proper strength. It should be something where the other person doesn’t have access to whether that be experience in building, financing needs or carry on [home warranty ] reputation or anything else that would kind of differentiate themselves from the other partner and of course you have to be very compatible in terms of your intended goals and outcomes when it comes to partnership [at all.]