Need help. How to invest with partners - Posted by Robert Baggett

Posted by David H on February 19, 2002 at 16:15:49:

This looks to me to be one of the purest legitimate uses of an LLC or corp, or even a formal partnership - to formalize the way that arms-length parties will work together. Everyone contributes their equity to the LLC/corp/whatever, and the LLC/corp/whatever pays the expenses of operating the rental.

Regarding credit - you can expect that no matter how you take title to the property, one or both of you will have to personally secure the note. If it’s only one of you, you’ll have to work that out with your partner as to who it is. Most likely your lender will make the decision for you, depending on how you decide to take title. Then it’s a matter of finding a lender with requirements that match your agreement with your partner for securing the note.

It seems to me you could also use an Equity Sharing agreement, but it’s not clear that would change much of what I wrote above.

Need help. How to invest with partners - Posted by Robert Baggett

Posted by Robert Baggett on February 19, 2002 at 11:25:34:

I am looking to buy a couple homes with as little money down as possible. Let’s start with an example. $120,000 house in Evereett, WA. If I take a partner do we use his credit? my credit? Do I need a formal strtucture such as General partner-limited partner. Who pays to manage the rental? How do we split when property sold. sorry to exppose my ignorance but any sane advice would be appreciated–hopefully from someone who has done it.

thanks, Bob Baggett

The best partnership is … - Posted by Bud Branstetter

Posted by Bud Branstetter on February 19, 2002 at 17:38:55:

No partnership at all. You can generally do the same thing with a lien and a participatory note or a land trust and a beneficiary agreement. It is best to do it one deal at a time. Even if you had an LLC who does what when and who gets what at the end. One of you can be in control, not both.