How to set up title and mortgage for a partnership?

Question

My wife and I are partnering with another couple to build a rental portfolio. When buying rental properties in a partnership what is the best way to setup the title and mortgage?  Is it possible to put all 4 names on title and then designate one couple for each mortgage, alternating with each property?  We don't have an LLC setup yet.  We're planning to refinance everything into a commercial loan, under an LLC, after we build our portfolio up to around 10 properties.  I'd love to hear what works best from other partnerships out there.  I appreciate any help or suggestions.

Aaron W. · Answer

@Ryan Pearson

You can call a title company or a real estate attorney and they can probably answer your question about putting multiple people on title and one person on a mortgage.  It sounds doable as similar things are done with syndications.

Best of luck!

Ryan Pearson · Answer

@AJ H. Thanks for the response.  In my question I'm trying to figure out how to structure the Title in relation to the Mortgage.  Can I put all both couples on title but only have 1 couple on the mortgage?  I understand the strategly of having less people on the mortgage to qualify for more conventional loans before maxing out. I'm just curious how other partnerships set this up and if anyone has any advise for my situation.  Appreciate your help.

Aaron W. · Answer

@Ryan Pearson You could put everyone on each mortgage, but when you hit your threshold of maximum residential loans allowed (typically at 10), then you'll need to find an alternative for more properties.

If you have a solid partnership agreement in place and want to be the most efficient, then you could place one person's name on each loan which will allow you, theoretically, up to 40 loans before hitting the limit.

Another alternative is to create a partnership LLC and place them all in there. You will only qualify for commercial loans at that time, however.

Best of luck!