Need help with LLC structure

1 Reply

Hello everyone,

Just looking for a little direction on where I can research this topic some more. I'm currently working with two (2) other investors who want to break into real estate. I need your advice on how one would structure a deal or LLC in this scenario.

Let's say, all parties put an equal amount into the company at the start. But majority of the work and research is being done by one individual, another individual will be doing about half of the work and research and the last investor will most likely be passive in this. How does one structure the company based on the amount of work being put into the development of the company? I'm sure in the future that more private investors will be funding a lot of the deals but I would hate for the individual putting in the most work to be diluted out of the deals. 

Any advice would be helpful, thank you!

My advice is general in nature. Be sure to get a competent attorney involved once you settle on what you want generally.

I advise you to have a frank discussion with your potential partners, and everyone talks, without holding back, about what they want out of the partnership, what they can do and cannot do, and their expectations of revenue and cost sharing.

Also, brainstorm, and come up with as many "what ifs" as you can. Anything you can think of, good and bad. Like what if partner X says he's going to do all the inspections, but he gets busy at work, and can't: who's going to do them, and who pays for that, us or X? Just anything that could go wrong or cause a ripple. Search BP for partnership problems, learn from them AHEAD of time.

It wouldn't be the worst outcome if after such a discussion, you find that maybe you don't like these folks as partners anymore, or one of them drops out. Better up front than when you're "in bed" financially with them.

Good luck, and do get a detailed partnership agreement in place!