I am about to submit an offer on my first home, a duplex that my wife and I are going to buy with my brother and his wife. We are planning to live on either side for a few years, rehab the property, then refinance to pull out equity for new homes, then rent both sides out. To be able to buy the home, we need both of our incomes to qualify for the mortgage.
Should we form an LLC to buy the property or operate under a Limited Partnership?
Rental Property Investor · Brandon, SD · Member since 2015 · 1k+ posts · 1k+ votes
3y
It's going to depend on Indiana law. The majority of investors I have met use the LLC structure. Usually, LLPs are professionals, like physicians or attorneys. You could also ask the attorney you will use to create your company documents. They will usually give you a first consultation for free.
Rental Property Investor · Indiana...mostly · Member since 2019 · 468 posts · 245 votes
3y
I haven't done what you're doing and i don't know enough about you to say what you should do, but if i wanted to co-own with a brother or sister and their spouse, in my case, I'd do LLC now-a-days. 30 years ago I would've done Partnership.
Property Manager · Indianapolis, IN · Member since 2022 · 150 posts · 59 votes
3y
You don't want to buy the property in the LLC. You will want to buy it in your name and then you can quit claim it over to an LLC when you rent it out for liability purposes. With a Conventional type loan, you can't buy it in an LLC. Has to be in your individual names. Not a bad idea to quit claim it over once you rent it out however. Great way to start investing! I did the same thing. Bought a double with an FHA loan putting 3.5% down. Lived in one side and rented out the other. Did lots of work to both sides. Had it as a rental for about 20 years and then recently renovated it again and sold it as two separate units. One of my biggest success stories!