JV Agreement vs Transactional Funding

What is a JV agreement in wholesaling?

A joint venture (JV) agreement is a written deal between two or more parties to work on a specific transaction together and split the results. In wholesaling, it usually means one party has the contract and another brings something the deal needs: capital, a buyer list, experience or credibility with a seller. The agreement says who does what and how the profit is divided.

What is transactional funding?

Transactional funding is short-term capital for the A–B purchase in a double close. (A–B is your purchase from the seller; B–C is your resale to the end buyer.) The lender wires the purchase price to title and is repaid from the end buyer's funds, usually the same day. Axelrad funds 100% of the A–B purchase price, with pricing that starts at 1 point. See the transactional funding page.

JV vs transactional funding at a glance

Axelrad's EMD page makes the same comparison for deposits: a JV partner puts up the money in exchange for part of your profit, while EMD funding covers the deposit for a fee and leaves the deal, and the profit, yours.

A worked example

Example only. The transactional numbers come from Axelrad's published example; the JV split is hypothetical.

You are buying at $200,000 and reselling at $230,000. You have paid $5,000 in earnest money. Combined closing costs are $5,500.

• Transactional funding: Axelrad advances $195,000. The 1-point fee is $1,950. Your published net is $22,550.
• Hypothetical 50/50 JV: A partner funds the purchase and the profit after closing costs ($30,000 spread minus $5,500 = $24,500) is split evenly. Your share is $12,250, and you have a partner on the deal.
• Hypothetical 70/30 JV in your favor: Your share is $17,150.

In this example, a funding fee leaves you with more than either split. The math changes if the partner also finds the buyer, negotiates the deal or brings a skill you do not have.

When does a JV make more sense?

• When the partner brings the end buyer, not just the money.
• When you are learning and the partner's experience prevents mistakes worth more than the split.
• When the deal needs something a lender cannot provide, such as hands-on project management on a longer hold.
• When the deal is not a same-day resale, and you need equity rather than a short loan.

What should a JV agreement cover?

1. Each party's role and contribution.
2. How profit, and losses, are split.
3. Who controls decisions, and what happens if you disagree.
4. Who holds the earnest money and who is at risk if it goes hard.
5. What happens if the deal does not close.
6. Signatures from both parties before any money moves.

Have a real estate attorney review JV agreements. Some arrangements to share profits on property you do not own can raise questions under state rules, and practices differ by state.

Can you use both?

Yes. Some wholesalers JV with another wholesaler who has the buyer, then use transactional funding for the A–B purchase. The JV agreement splits the profit; the lender's fee comes out of the B–C closing first. Agree in writing who pays the fee before you close.

Key takeaways

• A JV partner takes a share of the profit; a transactional lender takes a fee.
• On a same-day double close, a fee is usually cheaper than a split.
• A JV can be worth it when the partner brings buyers, skills or credibility.
• Axelrad's transactional pricing starts at 1 point, paid from the B–C closing.
• Put any JV in writing, including who carries the deposit risk.

Keep more of the spread

If you have the deal and the buyer and only need the purchase money, submit your contracts to Axelrad and compare the fee on transactional funding with any split you are considering. If the deposit is the problem, see EMD funding.