Creative JV; one side wants cash flow, the other equity

[Assaf Furman]

A colleague of mine has a small portfolio of rentals on the lower end, where his goal is to accumulate some more and finance them with a 15 yr mortgage so that by the time he retires he'll have them all free and clear to generate a decent cash flow. Me on the other end, am interested in equity and buying in an area that projects appreciation for the next few years. 

I was thinking that we can combine the two goals in a way that we can split the DP to buy an undervalued property on a higher end neighborhood, fix it up, cash out refi to a longer term loan, hold it, and once it gains a certain equity amount refi again but this time I'll be handing over my shares and he'll keep on holding it. This way he could enjoy a higher income from rent, better pool of renters and lower turnover with a low DP, and I could have appreciation play.

Any thoughts? Maybe someone attempted to do it? 

[Douglas Dowell]

Thanks for the mention @Brian Gibbons.  The following is intended as information and not legal advice.  Seek Local Counsel.

The beauty of the LLC is that is the number of creative ways you can use it are almost unlimited.

The trick is to meet 1) business and 2) tax objectives at the same time.   

The recurring issue is can I or should I?

The answer to the can I question seems to me is limited to only what you can negotiate.

The answer to should I should IMHO be subject to your after tax ROI targets relative to the next best alternative with an element of risk factored in.