An idea popped into my head today and I don’t know if it’s possible or feasible.
Hypothetical situation. You own a property with a mortgage. Bought for $100K with $25k down. Before taxes, it cash flows $7.5K. It's held in an LLC where you are the only owner. Could you sell interest in the LLC where the investor would not be responsible for any debt? Could you sell $10k worth of interest but only give $1.5k of the cash flow? Lastly, could the $10k investment be an unapportionable share of the LLC?
I basically want to sell a share of my properties but not dollar for dollar. It would still be a good deal for the investor, 15% return on their cash ($1.5K/$10K). I would also not want them to get a full $10k of the equity in the property. In this example I would like to have the $10k equal to 20% of the equity, or $5K. Would there be any tax implications?
@Paul Garcia , did you ever get an answer to this question elsewhere? I'm wondering something similar. We have someone interested in investing with us as a silent partner and we'd pay them a % return on their money but want to avoid the whole bit about 2nd liens on property, etc. Could they just buy a share of the company that paid a set dividend under pre-established terms? This is the question we're trying to answer. Curious if you've discovered anything along these lines. Thanks!
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