A guide to creating a joint venture consortium

Packagers

The opportunity to become a packager of consortium projects may look appealing, after all most of us could come up with a few good ideas and if we could get a number of people to each pay us a sum for these, then well would that not be easy money.

In practice its not that simple, for a start it has to be a business model that will work, it probably requires months of research, the funding of some advance development, maybe the formation of a company or two, registration of websites, commissioning of initial work on websites. You then have to convince Property Club International that this represents a good deal for its members, as all new partners in the new joint venture will become its members. They in turn will ask a consultant to look over the proposal and advise them.

OK lets suppose you have got that far, now the project has to be attractive enough that people will  want to become partners in it. Once the senior partners are involved you, or a consultant, will need to hold an initial meeting to introduce partners and then be available to both pass on information and transfer the project you have by then put many months of work into. Beyond that you will most likely need to provide some longer term support. In most cases the packager will work with a chairman appointed to run the first two meetings, and the cost of this has to be covered in the package. 

The factor that perhaps puts more people off than any other, is that you are not allowed to retain any part of it, so you as a packager cannot retain a partnership or a part of the action, or a contract as a service provider. The whole property rights of the business has to go to the partners.

Having done all this, you will of course recover the cost you have incurred and make a profit, however the amount that is accrued even across a fairly large consortium is not as great as you may initially imagine. When you compare this with the number of hours and amount of work you have put in, this is not likely to produce the same return as you could have achieved by being a service provider, running a business of your own or becoming one of the senior partners within a consortium.

The pricing of involvement in the consortium like the original plan for it has to be agreed with Property Club International, who while wanting to advance the number and coverage of opportunities are looking principally from the view of the partners you wish to recruit. This pricing is usually based upon costs and expertise put in, however no double charging is permitted so for example if you go down a route and then change direction, or need to go and get information in some way then this is unlikely to be included as they will view that this is the gaining of expertise, that you are already charging for. 

Property Club International will also ask a consultant to give an opinion as to if this provides a fair price, based on the cost of a group of people getting to the same position, commissioning the same work by others and being at the same position. However they do take into account the shortening of time required for a syndicate to move ahead from the position you have reached, as opposed to starting from scratch, and this often covers what you might expect to present as a shortfall in value.  

In addition around £5,000 on each franchise evaporates as far as you are concerned, £2k to pay for membership of the registration of the partnership with Property Club International and for the first two years membership for the partner, £1k to a promoter such as Self Build llc, £1k in advertising or lead commissions and £1k in cost associated with selling and completing the operation, including stake holders, chairman of the first two meetings and inter currency cash transfers. Let us take for an example a consortium that you might propose that would have 6 senior partners paying £8,500, you will see that this is reduced to £3,500 each after the £5k evaporation explained above. This may look Ok to you, after all  6 x £3,500 is £21,000, however you still have to cover all other costs such as company formation, websites etc, research costs and the like, so you can see this will be reduced to under half of this, leaving you £8k to £10k as your reward, but this could take more than  a year to get and even if you staggered the start of a number of syndicates under development, it is unlikely that you would earn what you could in other ways, with the same amount of effort.

So why would you want to do this, in most cases its because the developers are sold on the idea of this new style of economy and the job satisfaction they will get by being able to help a number of people to get into a venture that will improve their lives. To others its more a part time activity, something that can be done alongside a full time income, paying for a decent holiday and a challenge to complete. Others may hold a job that does not allow them the opportunity to become involved in business and the challenges provided by this is an alternative, to others its the challenge and experience gained that is of value, and allows them to put up with their well paid job that lacks the stimulation they strive for. Other may feel that they like the idea of a shorter burst of activity, and staging the development as they like, as in the case of a senior director who is in poor health or a parent who want to take on childcare, but is looking for stimulation and a project to get their teeth into.

You will see as you look across projects on offer that the full reward to the developer and their costs are recovered from senior partner appointments and all revenue after evaporation from partners goes into the syndicate. You will also see that with some syndicates a large part of the initial fees are left in the consortium to buy property or other investments.

If you wished to make a respectable income in proportion to the effort you put in, then as a packager you would need to either look at creating far larger syndicates or more likely forming a model that could be modified to allow the same expertise to be in effect sold a number of times, a good example perhaps is a business style which with minor modifications could be offered as different consortiums in different countries. This however does still involve you in some additional cost in that specific research and some additional work will be required for each country the model is run out to. In many ways this is similar to the company that proves a marketing formula and then franchises it many times over.

If having read this you have decided that becoming a packager is not for you, and particularly if you instead wish to develop the idea as a business yourself then take a look at Business Club International, and becoming a service provider, as this may well give you many of the advantages of belonging to both the New Atlantis family and bartering.

The main doorway site and exchange site for Property Club International is at www.property-club.org  
You may also like to visit www.property-club-international.org, it  contains a series
  of articles on joint venture consortiums and the organization behind them.