Is this the correct LLC strategy for a flip?

Question

Tom and Jim have plans to buy a house to rehab/flip or rent

Tom already has an S-corp established for his existing real estate company.  Jim wants to establish an LLC for his company.

Tom and Jim both agree to have an attorney draw-up an agreement that states  each of their responsibilities (financial & other) and how to split the net profit.

Question #1 - Is there a name for such a legal document?

Question #2 - When Tom & Jim  buy a house together,  do they create a 3rd LLC?

The purchase price is $60,000.  Tom and Jim agree to split the 20% down payment at the bank ($6,000 each) . . .  the loan will be in Tom's name (not his company name).

Tom will order materials, arrange contractors, pay monthly mortgage/utility bills.
Jim will provide the $15,000 in cash needed to rehab the property.

Tom = $6,000 initial cash (plus) time  = $6,000 cash outlay
Jim =  $6,000 initial cash (plus) $15,000 rehab cash = $21,000 cash outlay

Question #3 - how would the deed read?

Question #4 - what am NOT thinking of?

We will meet with an attorney but curiosity killed the cat until then.

Will Barnard · Answer

Question 1. It is called a Joint Venture Agreement (JV)
Question 2. No, that is why you do the JV and each of your respective companies are parties to the JV. If you form a new entity with you both as owners, then you simply have an operating agreement for that entity which spells out all that the JV would have.

Question 3. Both of your entities should go on the deed. The problem is, if you are getting bank financing and the loan goes in one of the two personal names, then title would also have to be in that name (as well as the name of the entity of the other party).