I've got a question about how you all structure partnerships. For example, say I want to partner with an investor. I would assume I would set up an LLC and we would determine ownership %s based on capital contributions or otherwise. However, I also know it's very difficult to get a loan when an LLC is purchasing a home.
So my question is, when partnering with an investor/friend/family member how do you legally set up the purchase to ensure cash flows are paid out as agreed? Do you both co-sign on the loan and simply have a contract that outlines how the cash-flows, capital expenditures, capital gains, etc. will be divided? Or do you transfer the home into an LLC after purchasing it?
What we do is we always purchase with an LLC, and then sign a Joint Venture agreement under that LLC. With that JV agreement you write in who does what and who invests what amount and stuff like that.
@Antoine Martel is this for residential? How are you able to obtain to utilize leverage under an LLC? Are you using hard money and just flipping?
This is for residential. Then you can get the HML or the mortgage under your personal name or your JV partners name.
@Antoine Martel Do you have specifications in the JV agreement about handling the mortgage then? it seems like the partner with the mortgage is taking on additional risk and not allowing him/herself the opportunity to finance other deals in their name.
Of course. Thats all part of working with the JV partner.
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