How does the Joint Venture work?

The Joint Venture is essentially a partnership agreement between the Investor and the Manager. A Joint Venture agreement is written and executed which outlines the terms of the relationship between each party, including each party’s duties, profit splits, distributions, accounting, reporting and liquidation. The asset will be acquired in an entity that has the JV partners as the members or beneficiaries, and is usually set up as a personal property trust which provides a low cost structure that allows for anonymity of the actual owners since it is not publicly recorded. Funds are held in a reserve account managed by the Manager and expenses/income are tracked via a simple spreadsheet accessible by all parties via GoogleDocs.

The Investor will provide the funding for the Manager to acquire the note, forward payment for any taxes or fees, and get the loan boarded at our licensed loan servicer. All due diligence and operations expenses are paid at net invoice. Upon acquisition of the note, a due diligence fee of up to 2% of the purchase amount is paid to the Manager for due diligence, contract negotiations and loan boarding/coordination with the servicer and seller.  All cash flow that comes from either working out a repayment plan with the borrower, or from liquidation of the home is split 50/50. After a 12 month period, the loan can be sold to another investor at the current market value at the time of sale, usually at a price that will yield an annualized return of 8% to 10% to the buyer.  Depending upon the final outcome, the Investor will have the opportunity to buy-out the manager based on the current asset value, should the investor want to keep collecting the cash flow on a performing note. See the dedicated page for a workflow diagram at