Purchasing Real Estate with a Partner

[Patrick Enright]

Hope everyone in the BP community is doing well and staying safe out there!

I am a new investor in the Atlanta area that recently got a solid deal from a wholesaler in our area. I plan on purchasing this property through a LLC that I set up and the sale contract reflects that. I also have a 50/50 Partner (close friend) on the deal that I plan on adding to my LLC as a member and executing an operating agreement to define the 50/50 split, contributions, profit/loss, etc.

Is there any other legal documents that other investors recommend to file/fill out? Want to be sure we are both covered in case something happens to the other or in case of legal disputes with property expenses or profits. This will be a buy and hold property that will be rented out for the foreseeable years to come.

Any help is great appreciated. Thank you in advance!

[Azeez K.]

Hi @Patrick Enright

Firstly, congrats on getting a solid deal. Assuming you have it already under contract and you are going towards closing. I am assuming you will take out a loan under your personal names and then quit-claim to an LLC or you may have a commercial loan and buy it under an LLC where you and your partner serve provide personal guarantee.

Honestly, the key document you would need is a solid operating agreement where you clearly define the articles (books,records and accounting, capital contributions, signatory authority, distributions etc.). Some of the key things you need to make sure are define include the buy-out clause, death/disability of member. You may want to consider buy-sell agreement with life insurance basically the individual co-owners buy life insurance policies on the lives of each co-owner. Thus, if you died, the company or the co-owners would receive the death benefits from the insurance policies on your life.

Anyways good luck and share the details of your deal once you close.