If I were you I’d create an LLC if your plan is to rent the properties. The LLC would file a partnership return, which would then pass through to the members of the LLC. Creating a “partnership” could end up being a real problem in terms of the property if one of the partners ends up with legal/tax issues as an example.
Nothing wrong with your plan, except that most lenders are going to require you to own the property for 12 months before they will look at a cash-out refinance based on appraised value rather than purchase price.
Posted by J Raffetto on January 24, 2001 at 08:33:52:
Need thoughtful advice: a friend and I are buying an investment property in Alaska for $80k cash, which we hope to fix up to the tune of $20k and then finance the house at the new appraised value, getting our initial investment back and then allowing the rent to pay the mortgage. He’s in Alaska; I’m on the east coast. We’re wondering whether we should create a partnership for this and other deals, or would that eliminate our ability to deduct the mortgage interest on our taxes? We’re also wondering whether the plan we’ve outlined for buying and financing makes sense. Thanks.