Joint Venture Property DevelopmentsJoint venture property developments are often mutually beneficial joint venture contracts between the various contractors and professionals that form the building blocks of most property ventures or property deals.Typically they would be the owner of the land or site, or sometimes the person or organisation that holds the development rights through an option agreement. There are also often main contractors who will sometimes carry out the build stage of the property development at cost, or arrange the development payment scheduled to assist with the project funding and lending criteria. Often Architects, surveyors, planning consultants and property development funders will provide any missing components of a good development team through their network of past project teams. There are various ways to structure a joint property venture, either through profit share or a mezzanine funding agreement, or simple through deferring invoice dates. The various mezzanine funding options or interest roll up structures help greatly because they keep cash out of the development in the build stage when funds are most needed. The issue is valuable cash gets tied up in the development to satisfy the development funders that it is not just their funds in the project. Then once the property development build stage is underway there is no cash through the door until either the project is finish and most importantly sold or at the very least the first stage. So it becomes apparent that when the cash flow or large site deposits are often one of the largest challenges that many property developers face, the need for more and more creative financing structures mean that the joint venture are often the best way to secure both the land option and the property development financing.
Interestingly the government have even used the basic principle with their public private partnerships, and in turn the joint property venture has filtered down to even some of the most basic property developments. When a small builder may chose to defer their invoice until a project is sold in exchange for a profit share, this can assist a developer who can only finance the site or project purchase costs.
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