Posted by Irwin on January 27, 1999 at 05:52:50:
Great answer!
Investing with a partner - Posted by Melody Cook
Posted by Melody Cook on January 26, 1999 at 20:25:51:
I am starting out in real estate investing with a friend. We have decided to create a limited partnership. What type of financing options would we have if we borrow under the partnership name? What are some legal issues and other “bewares” of investing with a partner?
Re: Investing with a partner - Posted by John J.
Posted by John J. on January 27, 1999 at 21:10:25:
I have invested with partners in partnerships for about 15 years. Will you be the limited partner? In that case you pretty well give up all control to the general partner. Have you considered a Limited Liability Partnership or Limited Liability Company?
A written agreement is a must. Spell out all responsibilities, how positive/negative cash flow, profits, and losses are to be split. I have been most successful with general partnerships where I have full management/operational control and my partners are investors. Since partnerships generally can not get loans, my partners purchase the properties in their names (up to three or four per partner)and take out the mortgage. They then quit claim the property to the partnership. The agreement spells out that the partnership (and therefore the partners according to their share)is responsible for the mortgages.
E-mail me if I can help further.
John J.
Re: Investing with a partner - Posted by Bud Branstetter
Posted by Bud Branstetter on January 27, 1999 at 08:49:37:
Many scares from investing with partners. Most lenders will want personal gurantees on loans so parnership is not usefull for that.
Instead, consider a participatory loan from the partner with money. Secure with a deed of trust. Do property by property.
Re: Investing with a partner - Posted by Judy
Posted by Judy on January 27, 1999 at 08:38:59:
Please be careful of partners. If there’s any way that you can start out in REI alone please consider it rather than partners. I’m speaking from personal experience in the setup of a business – nor REI related. But I think the same principles apply.
- See an attorney
- Write down all agreements
- Cover yourself in every way possible
Judy
Re: Investing with a partner - Posted by Bill Gatten
Posted by Bill Gatten on January 26, 1999 at 21:31:47:
The first, and pretty much the only, “Beware of Investing with a Partner” rule:
Beware of investing with a partner!
Bill