Updated over 8 years ago on . Most recent reply
Buying First Property with Family--Need General Help
My brother is moving to Phoenix for a five year residency and my family is looking to buy a place that will serve as a long term rental investment. He will be living in the house for the duration of his residency. Looking for advice in terms of how to structure partnership etc from the experts! This would be a partnership with parents, two brothers, and myself.
Would love to get some guidance!
Most Popular Reply
Hey Roshin,
This is a great question, but I think we need some more information first.
1. In this partnership will you and all of your family members be paying cash for the investment property or will there be a bank loan involved?
2. Will your brother be paying monthly rent, or are the rest of you planning to "gift" him the rent?
If you need to use a bank loan, you will likely not be able to use an LLC to purchase the property since banks prefer lending to individuals. If you are able to pay cash, it would be possible to purchase the property with an LLC in which each of you are equal part members. Since it is going to be a rental property, you should have the LLC taxed as a disregarded entity to ensure you pay lower taxes. As a flow through entity, you all will also have to agree on how the depreciation of the property will be claimed on your taxes. There are a lot more details I can go into once I know more about your situation. Your biggest disadvantage is going to be the huge fees California will charge you for having the LLC, even if you are only doing business in Arizona.