A joint venture pools capital and resources from multiple sources to acquire, maintain, and operate an asset that is beyond the financial or operational capacity of an individual. Joint ventures are perceived as less than desirable in North American culture. Canada’s predominant culture is individualistic where individuals generally concern themselves with seeking freedom and independence. Asian cultures are collectivistic where individuals mostly concern themselves with the benefit of the community and others.
Extreme adherence to individualistic values may create financial limitations. Home ownership in the current economy is becoming less affordable as prices continue upward. Fortunately, the largest inter-generational transfer of wealth in Canada is currently underway, but not everyone will benefit from this millennial jackpot. Real estate is the most consistent asset class to build wealth.
Such is the power of pooling capital from many individuals. This is what the big retail chains do. Combining the many locations into a single buying entity creates leverage. In the same way, it is possible to buy real estate that is priced beyond the ability of a single person to acquire. Combining the many investors into a single buying entity creates huge leverage.
This is how the exempt private capital market works. An Issuer creates an investment to raise capital for a project. The challenge for investors is conducting due diligence because of the higher risk associated with illiquidity. The focus should be on the management team’s track record and value system.
As an investor, your mainstay is to be informed and to be educated, so as to make the highest and best decision for your financial agenda.
