New investor here, taking action and embarking on flip 1 (thanks to Bigger Pockets). I have been fortunate enough to have networked my way onto a small team (4 of us total) of experienced flipper/investors, doing high quality work at excellent margins. I'm fronting the cash for partner 3 and then we split the profit 50/50 (he found the deal, got it under contract, secured HML, will project manage rehab, oversee sale AND brought me in etc. he's crushing it and a genuinely good dude too!). Doing my best to add value while learning as much as possible about the process from A-Z. Numbers look great, hit it off with the team, love the market... excited to get started!
Attention has turned towards strategizing with a real estate/tax attorney to be tax-efficient, maximize profits and enhance overall business and investing game plan. I want to make sure I structure things the right way from the beginning.
Flip 1 is under contract with an LLC the other 3 investors created together previously, that includes several active flip projects they're working on together. I wouldn't be able to become listed as a member on that LLC, as this is the only project I'm partnered on. Should I create my own LLC or S-Corp (active flipping) for this project? Land Trust?
General REI goals: 2-3 flips in 2021', 3-5 flips in 2022' + 1 BRRRR property (potentially out of state), 6+ flips + 2 BRRRR properties in 2023....
It's all moving fast -- being decisive as not to miss out on the opportunity but haven't even opened a business account for REI investing yet. I know you want to avoid co-mingling finances, track business expenses separately etc. so definitely want to move funds over! LONG STORY SHORT -- I really could use the guidance and strategy planning of an experienced RE / tax attorney asap!
Any insight and/or lawyer recommendations very much appreciated.
Thanks in advance
You are doing a project with 3 other people and not listed as a member of the LLC?
You are lending money to people?
You need to slow down and contact an attorney to make sure that you are protected ASAP.
The worst case story is that these guys can run away with your profits and your money.
When you are dealing with partners, have everything in writing.
It is cheaper to have things in writing now instead of heading to court with disputes later.
@Basit Siddiqi thanks for the response and advice. I've reached out to a new local CPA and we have a call tomorrow. That's step one, then will likely need to consult an attorney re: a Joint Venture agreement of sorts. All terms and details of partnership are discussed are already confirmed in writing, but definitely would feel much better about having RE attorney sign off!