Buy Hold Partnership Structure

[Jeff Bethke]

Looking for advice on LLC structure, partnerships, location of Attorneys and CPA's, etc for a 50/50 buy and hold partnership on 100% turnkey properties in different US markets. The simple plan is to go 50/50 with great friends on 100% turnkey properties. The reasoning is to accelerate our ability to purchase properties as we each only need 50% of the down payment and closing costs. Long term goals are aligned and I have no reservations regarding decision making or our ability to define the partnership roles. We have similar finances and neither need any cash flow from the properties for current expenses. We're also able to invest about the same capital each year for further acquisitions. I'm more interested in specifics like: I'm in AZ, partner in CO, buying in TX and other states. 1) where should our LLC be registered? 2) does it matter where our CPA and attorney are located? 3) should cash flow sit in a business account and be used to pay for expenses and to build cash for future acquisitions? Or be distributed to us each and we just come up with 50% of any expenses as required? I've read many threads on the relationship part of this, more interested in logistics and planning. Thanks!

[Bryan O.]

Hi @Jeff Bethke Here are my thoughts:

1) whatever State you want, but it should be registered to operate in every State where it owns property

2) CPA, not so much. Not sure which kind of attorney you are after. Typically, you will want attorneys for evictions or leases, and those are State-specific

3) @Ryan Gillette is right. The LLC needs to cover expenses and such. If your company is going to expand, then the income should probably stay in the business. If you do not want to grow your holdings, keep enough in reserve for capex, maintenance, etc. and then give yourself distributions as you see fit (monthly, quarterly, yearly) to get your profit out of the business and into your pockets