A New Developer’s Guide to Structuring a JV

Rab N. Nalavala

NEW YORK CITY—Acquiring and developing properties is expensive work for fledgling real estate developers. As a developer you are more than willing to bring your “sweat equity” to a property transaction; however, procuring “actual equity” to effectuate such transaction can be challenging. After you have maxed out the equity available from your rich dentist cousin and your nana’s bingo winnings, you will need to consider how to attract institutional capital—a “money partner.”

Once you have identified your money partner you will need to structure, negotiate and document your joint venture (with the assistance of knowledgeable legal counsel). In our practice, we constantly encounter new developers who historically may have relied on “friends and family” as their money partners or may have even self-funded acquisition and development work, but now need additional capital sources as they expand to larger or more complicated projects.