Multi-Member LLC Operating Agreement for Buy & hold, Key Points?
Hi everyone,
I and a possible JV partner are planning on purchasing a property with all cash, rehabbing it, and renting it out. In the future we may seek financing after seasoning to pull cash back out. We are open to the idea of repeating the process if it works out great. Our plan is to use a Multi-member LLC which seems like the best way to do this. This would be my first LLC and first partnership and I am hoping to get some advice on things to make sure we have in the Operating Agreement for things to go smoothly.
I don't know the legal verbiage yet, but some things we've agreed upon already are:
Splitting all initial acquisition/rehab costs.
All profits & losses to be split evenly, 50%
Opening a separate bank account for the LLC to receive rents in
All Cash flow will be put into a reserve account until the reserve amount is met, then distributions will occur (haven't decided on frequency).
Any time money from the reserve account is used it will need to be replenished before distributions kick in again
In doing some searching on the forums I came across a few ideas I think are good:
Setting a purchase cut off amount for a member to transact business up to a certain dollar amount (say $500.00) without consent of all members.
How things will be handled if either of us passes away, gets married/divorced, or wants out of the partnership etc.
I'm sure there are things that I'm missing that are super important and thoughtful to have in the OA. Any other ideas would be greatly appreciated. Also, If anyone has an OA they've used before and can share I'd be so thankful :) Please PM me
Thanks in advance all