Hold house in LLC with a partner but only 1 name on mortgage

Rochester, NY · Member since 2017 · 58 posts · 10 votes

Hello everyone,

I am buying a three family property and just got it under contract. My father has just retired and wants to be a 50/50 partner. He would rather not have his name on the mortgage. I plan on holding the property in an LLC. Is there a way he can supply me half the money for the down payment but not have his name on mortgage when I take the loan? When it comes to file for taxes we'd split everything 50/50 as well.

Who is a better fit for me to discuss with this - my Lawyer or my CPA? I'd love to have some insight here first on what you all think my options.

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Basit SiddiqiBusiness Member
Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
7y
@Will Stahl

You may want to speak with an attorney if you are protected if title is in the LLC and mortgage in another person's name.

Are you able to get the financing under the LLC?

Lawyer can set up the LLC and provide you with legal guidance. CPA can assist with the accounting and taxation regarding the LLC.
[email protected]917-280-8544
Basit Siddiqi CPA4.880 Reviews
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Tchaka Owen
Real Estate Agent · Merritt Island, FL · Member since 2017 · 986 posts · 1k+ votes
7y
@Will Stahl - do you have a preapproval that will finance a corporation? If not, you're going to buy under your name and later QC it to an LLC. Speak with an investor friendly lender because your dad could gift you half of the deposit, but if it's not really a gift, that's not being truthful. There are likely some investor-friendly programs out there.
The rest is pretty simple......draw up an operating agreement that spells out the terms. A good real estate attorney can help you with that.
Good luck!
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Hideyuki Gojima
Rental Property Investor · Long Island City, NY · Member since 2018 · 82 posts · 18 votes
7y
@Will Stahl
I think its not too complicated. Most of decent lawyers can handle the situation. Accounting and legal are different things. LLC, you and your dad have 50/50. The mortgage, your dad does not have to be involved as long as your solo finance can support it. If your lender allows, I don think there is no issue there.
It is just, usually, LLC is a vehicle for investment and owners have the interests in the business as much as your ownership.However, LLC can be more flexible for that. You can split your profit without giving ownership if properly stated. So it is a general business partnership, you are taking much more risk than your 50/50 partner. but it is your dad so i guess it is different story.
Talk to your lawyer and explain in details how you split your profit, asset, and debt. You should be good.
If your dad intends to give you (LLC) some money to pay the mortgage, you should speak with accountant and properly consider the money transfer well not to cause any trouble for both of you. You cant just put money in and pay it with the money. There are some ways. For this part, a normal accountant is good enough. He or she does not have to be an expert in real estate accounting.
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