Legal, Operational, and Financial, Considerations for Unusual Deal

[Nathan Rudibaugh]

I would love this community's input on a slightly unusual real estate partnership. I’m considering a project in collaboration with my sister, who owns rural property outside of Columbus, Ohio, where she also runs a homesteading education non-profit.

I’m interested in funding the construction of a dwelling on that land, with the intent that it could be used to support her educational programming, generate income as a short-term rental, and eventually (10+ years) become a part-time residence for my partner and me.

While I have some experience with more conventional real estate investments, this venture has a very different purpose and structure, blending family partnership, nonprofit collaboration, and long-term planning. I have a number of questions about how best to approach this from a legal and operational standpoint, including ownership structures, liability considerations, use agreements, and any zoning or permitting concerns that might arise.

I welcome all thoughts, ideas, connections, etc, and have some specific questions around:

1. Ownership Structures:

● What are the various ownership structures we could consider (e.g., LLC, direct

ownership with a formal agreement, trust), and what are the pros and cons of each in

terms of liability protection, tax implications, and flexibility for future changes in use or

ownership?

● Given the blended purpose (non-profit support, rental income, future personal

residence), which ownership structure would best accommodate these diverse

objectives and potential long-term transitions?

● How can we ensure clear documentation of the financial investment and Tenderfoot

property contribution, regardless of the chosen structure?

2. Liability Considerations:

● What are the potential liability risks associated with operating a short-term rental and

supporting a non-profit on the same property?

● How can the chosen ownership structure mitigate these risks for both parties?

● What type of insurance coverage would be necessary to protect against potential

liabilities related to property use, guests, and the non-profit's activities?

3. Use Agreements and Operational Framework:

● What type of formal agreement would be needed between L+T (as land owner and non-

profit operator) and N+K (as funders and future part-time residents) to define roles,

responsibilities, and financial arrangements?

● How can we clearly delineate the usage of the dwelling for the non-profit's educational

programming versus short-term rental use?

● What mechanisms can be put in place to manage rental income, expenses, and profit

distribution?

● How would future changes in the dwelling's primary use (e.g., transition to part-time

personal residence) be documented and managed within this agreement?

4. Zoning and Permitting Concerns:

● What are the specific zoning regulations in Athens, Ohio, for rural properties regarding

residential construction, short-term rentals, and non-profit activities?

● Are there any special permits or approvals required for constructing a new dwelling on

agricultural or rural land?

● What are the requirements for operating a short-term rental in this area (e.g., licenses,

occupancy limits, safety regulations)?

● Are there any restrictions or considerations related to the non-profit's educational

programming occurring on the property?

5. Long-Term Planning and Exit Strategy:

● How can we build flexibility into the legal framework to accommodate the long-term goal

of the dwelling becoming a part-time residence in 10+ years?

● What considerations should be made if one party wishes to exit the partnership before

the 10-year mark, or if the non-profit's needs change significantly?

● How can the agreement address potential future disagreements or changes in

circumstances between family members?

[Tony Bacon]

Sounds like a headache. Mixing family is never a clean idea. 

Have fun if you like arguing. Though, maybe your family can handle it, idk, mine can't.