How do I properly construct a purchase with a partnership?

6 Replies

Hey guys I’m Shawn! I’m a new investor who acquired his first property a year ago, a small multi-family (duplex) in Atlanta, Ga. I’m looking to acquire another property this year by utilizing a business associate as a partner in the purchase but I don’t know where to start or how to go about this! I’ve been reluctant to use other investors’ money in a purchase because of my lack of knowledge in this process. My main question is, who’s responsibility will it be to divide the earnings amongst the partners? Myself or the property management company?

@Shawn Smith

Welcome to the BP forums and congrats on your first property!

When considering options for a partnership, you'll want to consult with an attorney for the asset protection implications and a CPA for the tax implications. An attorney can explain the benefits of setting up an LLC along with an operating agreement.

Regarding payouts from the property management company, you would optimally have a separate bank account and have draws into the linked bank account. Then, you would distribute the profits from the business bank account to the partners based on the terms of the operating agreement.

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