Being with the operations behind joint proposals in real estate would be pivotal for businessmen venturing to take up certain real estate conceptions. This is particularly advantageous given that most of these conceptions are carried forward through a joint proposal.
In real estate, a joint proposal entails the collaboration of two or more entities to leverage their capital and complete the plan.
A joint proposal facilitates real estate executives’ partnership with corporations that grant them the necessary resources to carry out the venture. To illustrate this, consider a scenario where Company X owns a patch of land in Richmond, Virginia, while being situated in Chicago, Illinois. Mr. Y has been residing near that patch of land, supervising real estate deals for the last decade.
It has now been decided that Company X would like to develop the patch of land, constructing commercial space in downtown Richmond. They could enter into a deal with Mr. Y, funding him with the resources he would need in exchange for his real estate proficiency.
As a general rule, such ventures would comprise two entities- a real estate funding firm and a supervisor. This holds both for companies who may be formed into a legal corporation and otherwise. As the designation suggests, a supervisor would oversee the proposal’s daily activities, drawing from his white-collar expertise to keep it running smoothly.
Backing him up would be the funding firm that usually operates exclusively in finance. They may not work in the sphere of real estate per se, but they fund projects (be it the entire plan or part of it) involved in it.
Alongside this, a joint proposal could serve as a tool for procuring funds needed to develop an international initiative. This enables corporations situated overseas to work cohesively in real estate proposals that they might not have been able to undertake otherwise. For instance, consider Company X that is located in Chicago. They may be looking for investment opportunities overseas. Company Z may be looking for investors to start a project in their home city of Berlin. Therefore, they could enter into a real estate joint proposal and partake in an international project.
It is important to note that discrete members in real estate joint proposals are not subject to the other’s authority. Their venture is an entirely separate operation. The only thing that they are bound to is the venture’s gains or losses.
For a short description of some concepts in joint ventures, refer to the points below:
- Share of gains: It is essential that the members decide on the profit distribution ratio in the beginning.
- Resource Contribution: The entities should clarify the precise sum of funds they would bring.
- Supervision: The joint proposal contract shall be required to indicate the process for making decisions, as well as the privileges and responsibilities of all entities vis-à-vis supervising the operation.
Termination Procedure: The contract should also mention clauses for the circumstances under which the venture would end.