Best Options for a Business Organization Between two People
Hello everyone!
I recently just finished the rehab on my first investment property and now have it rented out for $500 a month. I purchased the property for $8,700, and put about $16,000 into repairs to the property. My total cash investment is around $15,000.
I'll admit, I bit off more than I could chew with this property and took nearly 9 months to renovate due to the poor condition of the property, but now the property should appraise in at around $50,000 to $55,000.
I gave my brother 20% of the "business" at this point in exchange for his help on renovating the property.
Now that we have completed the property, and have it rented out, we want to begin to form our business organization and acquire more properties.
We both have good credit scores, and make a decent wage for our area. As of right now, EVERYTHING that pertains to the property is in my personal name and is attached to my SSN. We want to form a business organization together and he'll buy in to equal partners. So the question becomes, what is the best business organization type for our situation?
If we created a general partnership, would be able to apply for loans TOGETHER? How would this work? Would the bank use both of our credit scores, income, assets and debts and go from there? The only difference is, I have much more debt tied to my name than he does, and I may not qualify due to my DTI. Would this still be residential loans or commercial loans?
Would creating an LLC be worth while? Neither one of have have any substantial assets that require protecting at the moment, but we will be forming a plan to acquire roughly one to two properties a year, while taking no draws from the organization, as all profits will be cycled back into the business to pay off other mortgages and etc. There is no mortgage on the current property, so that is our biggest asset for the organization.
I want to form the best organization that allows both of us to apply for loans together easily to grow our property holdings.
Thanks for all of your help!