My brother and I have decided to form a partnership to jumpstart our Real Estate Careers. And we are well on our way of having a solid foundation.
We've discussed goals, processes, consequences, and strategies to get where we want to be.
But, something did come up that I didn't' have the answer for, so I'll drop them below. Any help would be greatly appreciated.
- Him and I intend on purchasing properties in our name, and eventually transfer to an LLC. Is that a good approach, and/or legal?
- What are some things you wish someone told YOU, before you got into a partnership?
- If my brother and I purchase a property in our names, how can I include my wife on the deal if something were to happen to me?
- What are your deals based on with a partnership? For example, every deal is 50/50, or it varies on the amount of work/effort put in from each person?
Appreciate any advice or criticism! Thanks for taking the time to read.
Some may have different views, but every partnership I have done, always was in the name of an LLC. Doing so, also answers questions 2 and 3 because it would be outlined in your operating agreement. An operating agreement has very specific details as to what each partner contributes/brings to the table, as well as what should happen should one partner become deceased/incapable of upholding the partnership responsibilities.
Setting up your LLC and keeping things out of your name provides some level of protection should something go wrong. If you are going to be purchasing multiple properties, in my opinion it is the way to go.
It also becomes important when you look at how you are going to fund the deals. For example, if you decide to use hard money lenders, most require you to have the property in an LLC.
Thanks for your input Chris, I appreciate you.
Well, we plan on using PML at the moment, but we do have a few HML contacts, and frankly are open to anything that can help get us started, however that my look.
It was from my understanding that purchasing through an LLC when you are just starting off is more difficult than just purchasing under your own name. Or is that only when you are financing through a bank?
@Alexander Burkard I think they both have there pros and cons, but if you are starting a partnership and looking to grow, it makes sense to build with the protection of an LLC. It may be more difficult to get a bank loan with an LLC depending who you work with, but using a PML and HML with an LLC should make things a bit simpler.
This is also important when you think about marketing, and building a business brand!
Some may think this is jumping the gun and that you don't need a LLC until you have a few properties, and to each their own. I always felt between putting the systems in place first and growing while also being protected.
@Chris Tarpey That makes sense, and we are currently planning to do this for the long haul, so perhaps straight to an LLC would be better.
Especially for marketing and brand building, which I absolutely love doing.
Thanks again Chris!
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