What does it actually cost me to run a JV deal? Software, deposits, all of it

The "costs you nothing" version only holds if your partner funds the earnest money, and then you've given up part of your half for it. Money is never free, it's just priced somewhere else in the split.

I bring numbers and ask what's wrong with them, so: the $600 a month figure is somebody's full acquisition stack, dialer and list subscription and CRM and skip tracing, which is the cost of finding sellers. It isn't the cost of the JV. The JV part is an agreement and a joint disbursement instruction, which is paperwork. Separate those two budgets or you'll conclude JVing is expensive when what's expensive is marketing.

One line I'd add to the cost sheet that people skip: having an attorney review your JV template once. Not per deal, once. It's a one-time few hundred dollars in most markets and it's the cheapest item on the list relative to what it prevents.

Every JV template I've seen floating around free is two pages, and half of them don't mention who funds the deposit at all, so take my reading for what it is.

Working through licensing now and the thing I'd put on the cost sheet is the state question. In some states the answer to "can I be paid for this" changes what you're allowed to advertise, and finding that out from an attorney costs an hour of their time. Cheaper than the alternative.

keystone, on the floor question, my small multifamily habit applies here too: the real floor isn't the software, it's how many months you can go without income while deals cycle. Two deposits tied up in escrow at once and no fee for ten weeks is a normal stretch.

Reading everything twice as usual. The deposit being at risk while I hold no property is the part that reframes this for me.

I thought if the partner brought the buyer then the buyer's deposit covered the seller side and nothing came out of my pocket at all. Is that just wrong?

juniper, wrong, and it's a common mix-up. There are two deposits. Yours goes to the seller's escrow when you sign the purchase contract. The end buyer's deposit goes up when they take the assignment, usually later and sometimes non-refundable to you. If the buyer walks after your deposit went hard, their money isn't automatically your money. Running a small team taught me to ask which escrow every dollar is sitting in before anyone celebrates.

The clause that decides juniper's question is the assignment agreement language on whether the buyer's deposit is released to the assignor on execution or held to closing. I read those and they're split about evenly. If yours holds to closing, your $1,000 is exposed the whole time and the buyer's isn't.

Taking my time on a first purchase instead of wholesaling, though I'd point out that a JV partner with a working buyer list is essentially a service you're buying with a percentage. Compared against $600 a month of software you'd need to build the same thing yourself, half a fee starts looking arithmetically sane.

quill, that comparison is the one that moved me too. Except the software is a fixed cost and the split scales with your fee, so at $30,000 the partner gets expensive fast.

Which is the argument for the split shifting after a few closings rather than staying at 50 forever. keystone, did either partner you're talking to bring up a sliding split, or is it flat?