How do bring on a partner post-acquisition?

[Michael Giuffre]

Details on my somewhat unique situation:

1.) I purchased a single family home last week, using a conventional 30y fixed mortgage in my name only. I put 20% down.

2.) I intend to rent the property out to a tenant and it will cash flow (before maintenance and vacancy, but after PITI) about $650/mo.

3.) My lender knows my intent is to be a landlord, and I am paying a slightly higher interest rate on my loan since I am not occupying the property as my primary residence and instead am acquiring it as an investment.

4.) I have a partner that I plan to collect 50% of the down payment + closing costs from, and we will split all operating costs 50/50 and profit going forward. However, this has not yet been done - I would like to bring this partner on to split everything in the next 10 days.

5.) My primary concern is not to achieve reduced liability by using an LLC, but to figure out the easiest way to split all tax write-offs and income with my partner 50/50 without triggering a due on transfer clause with my lender.

Q: Since the title and mortgage are all in my name only, what is the easiest way to co-own the property 50/50 with a partner post-acquisition? I realize I could deed it to an LLC that is owned by both of us (which has it's due on sale clause risks) but is there any way for me to co-own (i.e. split) this property with my partner by simply using a partnership instead of an LLC? Or would contributing the property to a partnership also require deeding the property to the partnership?  I would like to avoid the due on sale clause risk if at all possible, but also share the depreciation/mortgage interest write-offs with my partner 50/50. Is there any way to do this?

Thanks in advance for any help!

[Jacob Brattain]

@Michael Giuffre it seems like your best option would be to marry your partner, which would allow you to easily become 50/50 owners

On a serious note, as you have hinted at, you should be careful deeding the property to a new entity. While an LLC would allow you to easily assign profits, losses, and expenses, if you are splitting everything 50/50 and aren't concerned about limited liability a partnership should accomplish the same thing

I've spoken to our lenders in Indiana that say they do not care if we quitclaim the deed to another person/partnership as long as the mortgage payments keep coming, but I've always been worried they would call the loan if something went sideways. You should check and see if the mortgage allows for assignments. If so, it might be possible to assign the mortgage to the partnership, but would almost certainly require both partners to sign personal guarantees. If that works, you would obviously be able to deed the property to the partnership without worrying