I'd like to get some feedback of partnership strategies.
I have been buying for cash for my own portfolio and I now have some folks interested in partnering on deals with me.
Since i have to move fast when I find a deal, it's cumbersome to get the funds ready from partners at the time of purchase. So I've been thinking about doing the following to bring in a partner:
- My LLC purchase the deal with my cash initially - this way I can move fast.
- Have a partner buy into the deal after closing by paying me 1/2, 1/3 (or what ever) and he now becomes part owner (a new deed will be recorded showing new ownership percentage)
- Set up an agreement between partner and my LLC regarding profit splitting/management fees etc (partner is passive)
What do you guys think?
- Do I need to set up a formal partnership for this? (I'd like to keep it as simple as possible)
- What are the tax implications of the partner buying into the deal (if any)?
- other issues??
I know I can just do a debt based loan and pay the partner interest without putting him on the deed (use a DOT instead) but I prefer asset based investments.
Appreciate any input.
I think it's smart to buy alone and add partners later for the reasons you stated.
Question 1: LLCs have members not partners. How ever you do it - partnership or LLC - you need formal agreements.
Question 2: Consult with your CPA. Also, tax matters are often set forth in the LLC or partnership agreements.
Question 3: Consult with your attorney about structuring your agreements and have your members/partners consult with their own attorneys/CPAs.
Thanks @Account Closed ,
I meant partners as in my LLC partnering with partners. They will not become members of my LLC which is just a single member LLC.
Agree with your consultation advise. Just thought a discussion would benefit as well.
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