Investing in rental properties with a friend, considering structuring as LLC

[Hardik Patel]

My sister and I are planning to invest in single-family rental properties together over the next decade. We intend to form a 50/50 partnership, likely structured as a two-member LLC. Each property would be owned under the LLC, with annual distribution of profits and losses reported via K-1s.

Has anyone set up a similar structure? We’d appreciate any suggestions or recommendations based on your experience.

Thanks!

[Ghassan Jabali]

Hello Hardik,

I hope you're doing well. Generally, a 50/50 partnership LLC can work to create business protections therein, but the optimal structure could change depending on what state the property is located in. If you are also concerned about charging order protections and anonymity, you may want to consider having a partnership LLC in a state like Delaware, Nevada, or Wyoming, and then for it to own the in-state LLC--again depending on what state the property is located in.

Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication.