The Definitive Guide to Deep Due Diligence - a podcast by Mark Homer

How to Protect Yourself When Going Into a New JV Deal

Are you looking into working with a JV partner on a deal? Have you wondered what you need to do to make sure you are doing the right due diligence to protect yourself? In this episode of Mark My Words, your host Mark Homer, brings you everything you need to know as you go into a JV deal. Whether it’s making sure you drip feed money into the deal or checking your JV partners credit history Mark lets you know each step of the process. If you are looking to loan money or make a deal with a JV partner this episode has all the information you need to get the deal that’s right for you.   KEY TAKEAWAYS

Get your JV partner to download their credit file. Get them to provide a credit file for you to have a look at before you go into the deal. If someone has a really bad credit history then you might want to question why you are going into business with them. Just ask them to redact any personal information if they are concerned with this.   The land registry can be useful to see who owns buildings. You can apply for a previous version of the register to see who owned the property in the past. If the building is owned by a limited company you can check on the companies house website. You can check the amount of debt or charges on a property at any given time, as well as who owns the company. Make sure to check for any liquidated companies and who is owed money. This might be a reason to ask more questions or not work with them on this deal.  It’s important to drip feed the money into the deal not send it all at once. If you are doing a development, send the money when the works are complete. Have a look on site before you pay and transfer any money, to make sure it’s all complete to the right level. If the transfers were done personally rather than through a limited company then they won’t show on companies house so ask for the documentation separately.  

Ask for three investor details that they have done deals with before. Have a look at their last three deals and ask them if they are happy for you to contact them. Check these individuals in companies house and on the land registry. Ask them how the deals went.  View the properties. Even if the property has been sold you can look through the windows. Start small with the person and then move onto bigger things. Some people say that they want to see as much information as they would show to a bank so in this case, they want to see some of these documents: SA302 which will show their income, a full property list of all the properties they own.   

For the highest degree of security when you’re lending money only lend on a first charge basis, and up to 70% loan to value. You must find your own solicitor, and own RIC surveyor. They must have good local knowledge of those kinds of properties. If you are going to provide a loan then you want a solicitor to create and execute this for you. Make sure you have a partnership or shareholder agreement that is written by your own solicitor.   Do the numbers add up? Speak to a builder about the costs? Are all the costs in the development appraisal? Check with the bank so you can refinance it to the value that it says. Make sure you understand the deal behind the joint venture.   

Do a search on Amazon with regard to people delivering training? Do a search on Google and on LinkedIn? How much coverage/reach they have? Is their website information-rich? Can you contact these people? Can you find a long history of content? What do other people say about them? What support do they offer?  

Best Moments ‘Ask them for their credit history.’ 

‘I like to see a track record.’ ‘As the person to supply documentation.’ 

‘Ask your accountant to help with this background work.’ ‘Control the money.’ 

‘Ask for three investors details.’ ‘Go with your gut.’ 

‘You need father time to show what this person is like.’ ‘Investors can misuse the information compared with a bank so be careful what you share.’ 

‘Insist on a personal guarantee.’ ‘Ask for copies for historical planning permission.’ 

‘If you don’t feel confident just walk away.’ ‘If you are looking at someone training then do your due diligence.’ 

‘If the same things are coming from different people it’s more likely to be true.’ ‘Making sure you are going to get out of it what you need.’ 

‘Be clear on your objectives.’ ‘Training is an investment.’ 

‘Only listen to people who have real experience.’ ‘Be careful from free advice.’ 

 Valuable Resources
www.creditexperts.co.ukwww.eservices.landregistry.gov.uk
www.companieshouse.gov.ukwww.mygov.scot/basic-disclosure/apply
https://www.ricsfirms.com ABOUT THE HOST
Mark HomerMark Homer is an entrepreneur investor.  He has worked with investment since he was 15 years old using the laws of wealth! He is a spreadsheet analyst with an impressive following from major publications including BBC Radio, The Wall Street Journal, The Independent, as well as co-authoring the UK’s best-selling property books.  Mark has always looked for the best investment vehicle, and at the end of 2007 with Rob Moore the co-founder of Progressive Property his joint portfolio produced more profit than any of the other investments he’d tried in the last ten years, combined. 

  CONTACT METHOD 

Markhomer@progressiveproperty.co.uk https://www.linkedin.com/in/markhomer1 
https://www.facebook.com/markprogressive https://twitter.com/markprogressive 

  

  

  

  

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