How Do I Find A JV Partner On A Raw Land Deal

I have a commercial property on a major US Hwy with great traffic count that would be ideal for a retail strip mall/hotel/restr/ etc. The owner has offered me the property at what will be 25% of its value. The property does not have sewer yet, so the value is lower. A major retailer just bought the adjoining property and is bringing sewer within 90 days, which will give this property sewer aceess as well. The properties already with sewer are selling for 3-4 times what he has offered it to me. I have very little cash and need a JV partner of other strategies to leverage this opportunity. Any advice would be appreciated.

[ Edited by dcsjlb on Date 10/13/2007 ]

dcsjlb

Most people don't answer these types of questions because they are usually very long & complex answers. Not to mention the fact that there is no one right way to do it. JV's can be formed in almost an infinite number of ways. That being said, I will try to give you the quick & easy answer...

If you want a JV partner to bring the cash to the deal, you will have to bring the plan. The first thing to do would be put it under contract subject to the retailer adjacent to the property or subject to something else to leave a way out of the contract and not put any earnest money at risk. If you are low on cash as you stated then you need to find someone for the seed money (earnest money, usually a site plan and/or conceptual drawings, etc..) you might be lucky and get the seller to pay for this but it is rare.

After you get your plan, then you need to get your proformas together and make sure the deal works financially. If so, then show the JV partner the plan and how /when they will get their money back and how much profit they will make.

Ex: Properties value will be $1,000,000 when sewer and retailer open. Contracted price is $250k. JV Partner puts up $250k cash or maybe credit and gets 50% of the deal.

OR

JV partner puts up the down payment (i.e. 30%-50% of the purchase price for raw land usually might be able to get a better/different type of loan if there is a house on the property) and gets X% of the deal.

These are just a coupe of over-simplified scenarios and the % and dollar amounts are only examples as everything is negotiable. Hope this helps...


[ Edited by JDC21 on Date 10/20/2007 ]