Joint Venture with a builder

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MB Enthusiast
Jul 28, 2006
Various Mercs and non Mercs
Does anyone here have experience of entering into a joint venture with a builder on a house rebuild / refurb?
What do you mean by 'joint venture'?

You're going into business with a builder or you're doing a one-off?
Not 100% sure what you mean, but I am doing a large project on my brothers house next month.

We will take on the subbies where needed but I am running the job, as well as laying the drains, all the plumbing, second fix carpentry and tiling the roof.

Looking forward to it.
I supply the plot - he funds the build for a profit share.
Count your fingers carefully...
I'm a chartered surveyor and barrister, what's your question?
It's workable and has been done many times. Do you have experience in this field?

My sister and husband (both surveyors) are based in Warlingham in Surrey.

Not in this way but have done many projects in the 'normal' way.

Costs are to be as clear as possible and covered by a contract but I'm interested to hear how it has worked, or not for others before making a decision.
My accountant's 2p

Profit Sharing is all very well if you agree how the profit is calculated.
Some sort of written agreement between you both is in order.
The land needs to be valued by a method acceptable to both parties.
The materials, labour and other inputs need to be measured and the budget for the build agreed in advance.
Very simply, net sale price - house build - land = profit.
Is your builder friend going to charge for HIS labour or project management?
Is he going to charge the interest on any loans he needs to finance construction?
How visible are his costs and those of subcontractors?
Personally, I wouldn't want to be measuring every little thing (s)he does but rather agree up front a price for the house based on an agreed specification. Any cost overruns on construction or failure to build to specification being the responsibility of your friend to bear and rectify.
Ask yourself what will happen if your friend cannot finish building the house? Do you "buy" the half completed house and get it finished yourself? And how will this affect any profit share?
I appreciate that there is an element of trust in this transaction but as an accountant I always ask myself what is the worst that can happen and how can it be mitigated.

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