Posted by Bob Meister on December 04, 1999 at 09:24:52:
Look at Bill Bronchick’s site, www.legalwiz.com he has everything you need to form an LLC with 3 members. He also explains how to title the property into a trust.
Many ??? about Forming a Partnership - Posted by Katie
Posted by Katie on December 03, 1999 at 20:17:09:
I have some questions about forming a partnership. There are three generations of women; grandmother, mother and daughter. They would like to form a partnership where they could each buy single family homes and add them to the partnership. How would they go about doing this? They already have a method of dividing the assets fairly by level of investment and energy put forth finding the properties. What they want to know is how to show the profits and losses to the IRS. They don’t want to break any laws. They also want to know how to put all three names on the properties in a way that will not create a nightmare with the loans. There are no other potential heirs to interfere. Grandmother had only one child and the mother had only one child.
This is what I did. - Posted by John J.
Posted by John J. on December 04, 1999 at 21:08:28:
Katie, I’ve participated in numerous partnerships and do it as follows: An individual partner buys the property and gets the loan in his name. He then quit-claims the property to a partnership. Whether you do a partnership, LLC, or a trust, make sure that you draw up some kind of agreement that spells out everything in writing that you agree upon. I’ll be happy to send you - or anyone else who emails me - a copy of one of my partnership agreements. Since you are all family, you might also consider establishing a family trust or a family partnership. An estate planning attorney can help you. If each of you are going to buy one house, you might consider keeping everything separate. A partnership might result in unnecesary complications.
Re: Many ??? about Forming a Partnership - Posted by Bud Branstetter
Posted by Bud Branstetter on December 04, 1999 at 10:26:59:
Are we talking about you or someone else. A partnership can be formered informally buy having all the names on title or more formally by an LLC or other entity where the title is held in the entity name. Profits flow through on an partnership by it issuing a K1 to the idividuals. Even if a formal entity is used a lender will want an individual to personally sign for the loan. From an investors point of view that is generally not desireable.
An alternative is to have one person buy and have the other investors secured by a deed of trust with an underlying participatory note. The note can provide each with an interest return and/or a part of the profit.