How to Finance Commercial Real Estate Deals Using Joint Venture Equity

 

A commercial real estate property

What if you come across a commercial real estate investment opportunity but have insufficient capital to swing the deal? That’s where JV (joint venture) equity comes to the rescue.

But what is joint venture equity? And how can you use it to your advantage? Read this guide to learn more, and check out GCP Fund for joint venture financing in New York.

Joint Venture Equity

Joint venture equity or common equity in real estate is the capital invested into a commercial real estate opportunity to cover a risky portion of the capital.

Structured joint venture financing can potentially maximize cash flows for you. It’s similar to a business partnership, only limited to a specific real estate project.

For instance, if you purchase a piece of land but don’t have the capital for development, you can contract with an investor or sponsor to share profits, losses and costs.

How to Finance Joint Venture Equity

If you want to successfully strike a JV deal, you need to follow these tips:

Get Representation

If you’re a new developer, you might overlook hidden costs, taxes and fees associated with JVs. Having a professional represent you is better if you want to establish a successful joint venture. They’ll have the relevant expertise and can take care of all the important elements of the transaction.

Be Organized

Being meticulous is key to securing a JV equity deal. You must understand the process from an institutional perspective. Be extraordinarily upfront about reports, models and schedules. After all, you’re asking an equity group to invest millions in the venture.

Payment Timing

Each party need to understand how and when the funds will be dispersed. Clarify the payment timing at the time of forming your JV contract. This will reduce the risk associated with the development process.

Business Entity

Keep in mind that there are tax advantages associated with different types of business entities. LLC is a common entity in most states, whereas it makes sense to form a limited partnership in some jurisdictions.

An image of a commercial building

Also, define boundaries and build exit strategies. Joint venture equity is an attractive option for commercial real estate opportunities. Global Capital Partners Fund can help you secure structured joint venture financing for real estate investment opportunities. Connect with them today!

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