How do I buy homes with a friend?

[Shawn Luke]

Hi everyone,

My friend and I would like to start purchasing single family homes as rental properties. I'm struggling to understand how to start this process. I read about LLC's, and how its difficult for it to obtain loans. Also I read about these 'due on sale' clauses and how transferring a property to a LLC could be difficult.

So my question is: How can my friend and I buy a home together without being charged more for a loan and show a business entity as the owner, which my friend and I will be 50/50 partners? I am trying to see what options we have. If LLC is not the way to go, please advise different options.

Thank you for your help,

Shawn

[Ed O.]

Hoe good of friends are you? Partnerships kill friendships. I can vouch from experience on this subject. 

Your best bet is either your friend or yourself buy 1 property in their own, individual entity. You both help eachother out, however, the owner is the owner. 

Then the other person completes the same process. Person 2 buys a property, and the first buyer helps them out.

I'd wager that 95% of partnerships among friends fail, and many of them fail the friendship and turn them into adversaries. 

If you think you're one of the rare exceptions, like so many before you that have failed miserably, you must have a solid legal agreement, including, most importantly of all, how you will wind down the operation and distribute assets if one of both of you want out.