Proper RE holding structure. Joint Venture vs. LLC (or both)

[Anthony Casa]

Hi All,

I am forming a partnership with an 1 other investor to acquire a property. I'm having trouble determining the best structure for the partnership and if I should be forming a LLC, a Joint Venture or both.

Is the simplest/best way to do this is to just have the an LLC acquire & hold the property and then have ownership and responsibilities defined in the LLC management agreement? Or should a JV be formed above the LLC that defines rolls, profits, fees, etc.? If a LLC has the advantage of limiting liability that is not provided by a JV, when/where would it be advantageous to use a JV?

[Ashish Acharya]

Originally posted by @Anthony Casa:

Hi All,

I am forming a partnership with an 1 other investor to acquire a property. I'm having trouble determining the best structure for the partnership and if I should be forming a LLC, a Joint Venture or both.

Is the simplest/best way to do this is to just have the an LLC acquire & hold the property and then have ownership and responsibilities defined in the LLC management agreement? Or should a JV be formed above the LLC that defines rolls, profits, fees, etc.? If a LLC has the advantage of limiting liability that is not provided by a JV, when/where would it be advantageous to use a JV?

Anthony, if you expect to enter into more partnerships, you don't want partnership or LLC for each venture from a taxation perspective. You would benefit from a holing company that will hold other SMLLCs. You need to talk to your tax advisor to determine the best structure for this because you don't want to lose the entire cash flow from the properties to cover your tax compliance fees.