property conversion JV......

[isleofthorns]

I'm currently starting to plan a property conversion (office to flats) with a builder I know. I'm looking to do an equitable joint venture with him, whereby my company finances the purchase and build and he undertakes the conversion. I can offset my costs and interest and his contribution is in the form of labour.

We're looking to do a few similar deals in the future, so have thought about how to make the arrangements.

Either,

1) My company handles the purchase + costs, and we agree a profit share that he can invoice once the flats are sold (or let and the values agreed). I presume this would have to be from his company and will have to be vatable, which may be an issue if I intend to let the properties rather than sell).

2) We est. a new co and I fund the new co., on agreed terms, and build equity in a new co., for future deals etc.

3) Some other form of JV?! (any advice welcome......)

In any case, I'd have to have financial control and charge against the assets until sold.

thanks

[Kudos]

Do you trust this builder? How can you be sure you aren't being ripped off by him on costs to convert?

Separate note, I did a similar project a year or two ago. Budget more than you think, it can get expensive.

Good luck

[JQ]

I don't understand why you'd want to do it. What's in it for you, it just seems like you're wanting to give away some of your profit to someone who's not taking any financial risk? Develop the property and employ him as a builder, he'll still make a profit. Do it again and he'll make more profit - you both win, but if he starts under performing it's far easier to get rid if you've not created some form of JV.