What's the best business entity for unmarried couples?

Question

Hi BP Community,

My boyfriend and I are looking to invest in a fourplex together.  We both have other investments on the side.  Since we are not married, should we set up an LLC or some other form of business entity?  And what's the best strategy for applying for a loan?

Thank you in advance for your input!

Billie Chen · Answer

thanks gentlemen!  Really appreciate your time to answer my question.

Thomas S. · Answer

You do not need a LLC.

What you do need is for a lawyer to draw up a legal contract as with any investment partnership. You need to lay out all the details for the investment from purchase to sale as any investment partners would do. Ignore the fact that your are in a personal relationship as well since that may not last.  Do it right, make it legal.

Marc Winter · Answer

A fourplex is not considered commercial property, so you will have an advantage rate- and term-wise if you apply as individuals, not an LLC or Corp.

After closing you might transfer title into a trust or other entity, but remember, any of these strategies will still leave both of you responsible on the financing.

If you took title as tenants in common, it might make a possible split-up a bit easier.  However, @Bob Okenwa is correct--check with your attorney and/or CPA.

Bob Okenwa · Answer

Honestly, you should speak with an attorney and CPA. Things can go sideways pretty fast in real estate and the last thing you want is a sticky financial situation on your hands due to improper entity planning.