Joint Venture (JV)
A business arrangement where two or more parties pool resources to complete a real estate deal.
Definition
A joint venture (JV) is a business arrangement where two or more parties combine resources — money, expertise, time, or deal flow — to complete a real estate transaction or project. Each party contributes something the other lacks.
Common JV structures: money partner (provides capital) + operator (finds deals, manages renovations, oversees the project), with profits split according to negotiated terms — often 50/50, 70/30 in favor of the operator, or based on preferred return structures. JVs allow new investors to access deals and experienced investors to access capital.
JVs must be properly structured with an operating agreement or partnership agreement drafted by an attorney. Key terms include: contribution amounts, profit splits, decision-making authority, dispute resolution, exit provisions, and what happens if one partner can't perform. Handshake deals between friends lead to expensive litigation.
Related Terms
Private Money
Loans from individual private investors — usually friends, family, or high-net-worth individuals — secured by real property.
Gap Funding
Private capital used to cover the difference between a primary loan and the total funds needed for a deal.
Exit Strategy
The plan for how and when an investor will eventually sell or dispose of an investment property.