Questions About Partnerships

[Eric Sipe]

Hello all,

I am going to be buying a small multifamily in Florida not too long from now. It is going to be my first property. I want to partner with someone I trust and value (it will be his second property in addition to his own home he has rehabbed) but am unsure how partnering really works. He and I have already discussed it and have very similar plans and values and are committed to building a successful business.

My question is: how do we handle a partnership with a property? Do we both own the place or will just one of us own and both of us split profits according to a contract? If someone could walk me through how a partnership works (or if what we want is even possible), I would be very grateful.

If any other info is needed, please feel free to ask.

Thanks,

Eric

[Jonathan Twombly]

Own the property through an LLC in which you each own 50% of the memberships units (shares in LLC-speak).

You need an operating agreement that spells out your rights and duties. 

Please hire a lawyer to advise you on this. Being cheap about this will lead to all sorts of very expensive and unpleasant consequences later.