How to structure an LLC with a capital partner

Question

Hello all, I'm looking to start investing in small-medium sized apartment complexes and I'm trying to figure out the best way to set up a business entity. I would be funding the down payment and closing costs with capital partners and offering them 70% equity.

From what I understand I would form an LLC with my partner so both of our names would be attached to it. If I did this, I would have to form a new LLC if I wanted to partner with a different investor on another deal. So, would it be better to form a sort of 'personal' LLC that I am the sole owner of and keep my partners on the outside of that? How would I even structure that, legally speaking?

Sorry if this seems like a dumb question, but this side of real estate continues to elude me for now.

Scott Wolf · Answer

@Logan Eckstein, each property would get a new LLC.  You could be listed personally in each LLC or with your own LLC that you use to invest in deals.  If your partners are OK with that structure, and you're taking no additional fees you should be fine.  If you do take a property mgmt fee, you should just create an LLC for a PM company and contract the PM company as an outside vendor for each property.

Steve Vaughan · Answer

Sounds like you have a lender.

I'm doing my 6th deal with my private lender.  I pay them 6% on 20yr amorts.  They get a note and deed of trust.