Why do you need a GREAT lawyer?
I have a pretty fast and furious response for real estate investors who tell me they don’t need a lawyer to finalize their JV deals.
These people usually tell me they follow most aspects of a “savvy real estate investment system.” They work with family and friends from their Inner Circle, they stick to deals that make sense for their business model (the classic 50/50 buy and hold, rent-to-own or renovate-and-resell) and they always lay out the details of a planned exit strategy.
As they see it, not paying for a lawyer’s expert opinion is business efficiency. Why spend money that you don’t have to spend?
I see it differently. As far as I’m concerned, the approximately $1,500 you and your JV partner will each spend on a real estate lawyer
May be the best money you ever spend.
It’s an investment in your partnership—and a down payment on the health of your long-term relationship!
A successful real estate investor knows they have to prescreen every JV prospect, even if it’s their own mother. But that’s only one step in critical due diligence. If your deal goes ahead, then you need to back up what you think you know about your partner with a legal agreement that protects both of your interests.
Ideally, that agreement will be drawn up by the real estate expert’s lawyer, a legal pro who knows his or her away around the real estate investment business. Once that’s complete, the document will be vetted by your partner’s own legal expert.
That’s right. You’ll both pay an independent lawyer because you both want to make sure that the agreement protects your individual interests. If you’re still not convinced you must have a formal JV Agreement drawn up by a real-estate-savvy lawyer, keep reading.
I know people who partnered with their parents or siblings on several properties. Everything went great—until everything went wrong. What if your partner needs money to deal with financial stressors related to a health issue, divorce or unexpected legal bills relating to a completely different business venture?
Are you really willing to risk everything on a hunch that your money partner won’t change his mind—or have it changed for him by a life or business partner, not to mention unforeseen circumstances? Think about how an “early exit” on one property could negatively impact other parts of your portfolio.
Most successful JV investors will tell you they’ve never had to go back and pull up a JV Agreement. Once it’s signed and filed, it guides the investment and if changes are necessary, it also guides how those changes are to be managed.
Remember to always have a good lawyer on your team, and make sure your lawyer is an expert in Joint Ventures, because you would never go to an optometrist to get your foot fixed.
Russell Westcott
#Inspire # Encourage #Love
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