Best Contingencies for LLC operating agreement

[Kris Marmol]

Hello I am looking to opening a new real estate LLC I was hoping to see if you guys could help me with examples of good contingencies to have our lawyer include into our operating agreement. I am going into business with a partner on the first property and will add more partners to other projects that we do. Thank you for your help!

[Daniel Dietz]

Our Operating Agreements (4 different LLCs) are tucked in the safe a work, but from my recollection a few main things to cover are;

• How and when will capital contributions be paid back? (ours at the end of partnership or at time of refinance if doable)
• How will members be compensated for their time, and what all is 'payable'? Meaning physical work, paperwork, etc.... (We 'pay out' for all hours such as PM, paperwork, maintenance work etc... @ $24 hour. Then split what's left by % ownership)
• What if a partner wants out before *X* number of years? What will that look like financially? (We use a 'rent multiplier formula', 100 times rent, to value properties)
• What if a partner dies? Can their heirs stay in the deal if desired? (ours have the choice either way)
• What if you run low on funds, who will be required to contribute more, and how will they be compensated? (Ours is all must chip in even)

Those are off the top of my head.

Dan Dietz