Joint Venture Contract Between Friends

Scott Costello All, Blog Leave a Comment

Joint Venture InvestingToday my mastermind group had an impromptu meeting in order to get one in before Christmas and New Years hit.  It has been a while since the last meeting so I was looking forward to it despite being very tired from a long day at work.  I actually took a quick 30 minute power nap in my car cause I got to the meeting early.  It was freezing outside, but the heated seats in my car made for a comfy spot to close my eyes.

Each meeting we are required to come with one problem/topic that you have been dealing with and would like to brain storm about with the group.  Because I recently joined forces with Lance, who is returning some of the phone calls that I’ve been getting with my marketing, I figured it would be a good idea to talk about setting up a contract between us that would outline how each of us were to get paid if one of the shared leads turns into a deal.

The consensus was that we break down each aspect of the work into percentages and that would be how much we would take from the profit.  Sure there are probably holes in the theory, but we are going to go with it on a deal by deal basis.  Off the top of my head, here is the breakdown of what such an agreement might look like.

  • 15% – Initiate the Lead (i.e. bring in a hot lead from marketing)
  • 15% – Do the initial call screening and getting details about the property and sellers situation
  • 10% – Doing leg work to come up with repair estimates
  • 30% – Getting the house under contract (financing included if part of the deal)
  • 30% – Finding the buyer

The reason for this type of agreement is to give us a guide how to pay out any profits between us.  Not every deal we work on will be a cooperative effort, but the ones that happen to be I think a simple plan like above will work.  If we both happen to work together on a portion then we will split that portion down the middle.

So what are the pros and cons of this setup?

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