Joint Ventures As A Note Investing Strategy

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Joint Ventures As A Note Investing Strategy

We are receiving  more and more questions about joint venture opportunities with each passing week. 

 In the past questions  seemed to be “ how do I get involved in note investing, how much should I pay for a non-performing note and how can I be sure that I have  performed a complete due diligence?”  While those questions are still common, more and more often I’m asked about joint venturing. What is a joint venture and how do I get involved in one?  

A joint venture is simply a partnership between at least two parties where  the parties split the investment to enter the venture and then split the profits that are generated by the investment.  The investments made by each can be differing assets.  For example one party puts up the cash to purchase an asset while the other party puts up the expertise, the labor to operate the investment and profits are split in whatever percentage is agreed.

After asking several investors why they have turned to joint venturing, a common reasoning became apparent.  While these investors learned of the high yields available from non-performing notes, they were concerned that it was a new field and a completely new endeavor for them.   

Most did not want to spend the time to “learn the business,” and the gray area in compliance and regulation kept them somewhat at bay.  However, the returns still looked very appealing.  What was the best way to get involved?  Many turned to joint ventures.

In this joint venture scenario we have an accredited investor seeking a high potential yield without having to learn a completely new business model.  Up steps a professional in the non-performing note field, a professional with sources in place to find product, the necessary skill set to redeem the inventory purchased and the expertise to service the loan.  

Together they form a partnership to purchase and workout a note portfolio.  

The investor puts up the money to purchase the portfolio and the note professional puts up the expertise to purchase the notes, complete the due diligence, work out the note and collect monthly payments.  In most cases then the profit is split on a 50%/50% basis.  

This is the most common way for our company to get involved in a joint venture.  We have completed them on the purchase of one note as well as purchasing a portfolio of non-performing notes.

Have you considered how a Joint Venture can increase your success as a note investor?

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Ron has a 40 year history of entrepreneurship having started or bought, grown and sold ten companies; two publicly traded. He brings an extensive management background and business sense to trust deed investing. Mr. Happe holds a BA in Business with graduate studies in economics and management. He is a licensed real estate broker with NMLS endorsement, a licensed general contractor and holds numerous professional designations including Senior Business Analyst with SBA.