Compensation within an LLC

[Jonathan McGarrity]

I recently started an LLC with two partners. I'm long distance and they are both local. I am evaluating deals, providing the capital and securing lending. They are visiting prospects, rehabbing and managing properties. We are closing on our first two deals. What are ways to structure compensation and ownership?

[Henry Clark]

What does your LLC operating agreement say? That is what rules.

On your other post said you’re doing buy and hold.   Although it is important, even more so with this investment approach.  

Death, divorce, bankruptcy, mental, dissolution.   How do you handle these?  How do you do valuations? 

Are all three of you on the bank account or one?   Doesn’t matter.  Anyone on the account dies, account gets frozen until probate. All your cash is tied up.  Is the account TOD?  

Recommend you don’t do a deal and have someone look through your business model.  

Your operating agreement.  Do you have a section that says you can vote or choose to stop income/cash distributions? Why do you need this?

What other questions are out there?

How are your life insurance policies?