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.