How to handle Flipping business? LLC's, operating agreement, legal...

7 Replies

Hi Biggerpockets!  Looking for some help or direction.  My name is Josh and I am a new real estate investor in southern California.  I will have a partner who will finance our first flip completely and was wondering what steps i should take to protect both of us.

I plan to purchase a property for all cash and flip it in the next couple of months.  I will be handling the entire process of finding the property, working with contractors and selling the property.

I will be working with a partner who will finance the entire purchase and rehab.  

I'm curious as to the best way to document this and protect both of us? Things like, do we transfer the money to my LLC as a loan and build an operating agreement that specifies the payout terms and covers possible outcomes like having to rent the property.

Do we purchase the home under an individual LLC(ie. 123 Candy Lane, LLC).

Any help would be appreciated.

Josh

Hey @Josh Ridener  , from my experience (I'm a newbie as well) and listening to MANY Podcasts I believe you should probably chat with a Tax Strategist.
I have one to recommend, she works with many investors and knows how we do what we do. She charges if you end up using her, not before.
In case you want to listen to one of these Podcasts (in regards to investing, taxes etc.), I'm listening to #49 as we speak...full of insights...but I'm glad I got a Tax Strategist before I got into all of it.
Good luck.
Let me know if you need that persons info.

Sean

Hi @Sean Hurwitz  .  Thanks so much for the insight.  That would be great if you could send over her details.  I've also reached out to two Real Estate/Business Lawyers and hoping to gain some insight from them as well.

Best of luck!

Josh

Originally posted by @Sean Hurwitz :

Sure thing @Josh Ridener  
I'll send you her info right away.

 Hello Sean,

Can you please provide the contact info of her. I'm planning to get into RE investing and would like to consult with her.

Thanks in advance.

Sure thing @Kranthi K. 
Comin' your way.

Hi Josh,

Could you please share the JOA which you drafted (blocking out all the provate info ). Everyone would really apreciate that.

Thanks

I would establish an LLC specific to this investor and you, eventually. At first I may try to buy as TIC and have a JV agreement. See how it goes after that.

I would name it generically if you get that far. Be careful saying 'individually' like 123 Main St. Individual in the LLC world means single-member. Sounds like you may have a professional referral so I will take my leave. Good luck @Josh Ridener and pls keep us posted!  

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