Logical Next Steps

[Tom Lacey]

Hello everyone,

This is officially my first post on BP.  I listen to 2 or 3 podcasts a day and I am looking for some direction on the next steps we should be taking.  

I am planning to buy a multi family property in Pittsburgh that I plan to BRRR. For this first property, I will be investing with my close friend who lives in Chicago (I live in Pittsburgh). He is a VP at a large consumer office products company and I am a project manager at a Fortune 100 Medical products company. So, two W2 employees with families, owning our primary residences. We both have money available for the down payment and initial repairs (We have both committed $50K each at this point, but this could adjust if the right deal comes along).

Question #1 - I know everyone has an opinion on LLC's. Could you give me some pro's and cons based on the information above?

Question #2 - In the future, we may be looking for private lenders to invest in larger properties. Does that have any impact on how we set things up at this stage? Would an LLP make more sense?

Question #3 - We may look to pulling money out of our self directed IRA's. I would be the primary property manager. How does that affect how we set things up? I think I have read about the fact that the investor using self directed IRA's cannot be directly involved with the property management.

Question #4 - If we were to pull money out of our primary residences with a HELOC, how would that affect things?

I appreciate any of you taking the time to give me some general guidance at this early stage in my Real Estate Investment career.  If there are other posts that answer the majority of my questions, I apologize for not doing an exhaustive search. 

[Kumar Paj]

my little $0.02....

I tend to agree with @Terry Gillis overall.  

As a side note, you may want to consider using Series LLC (I am assuming this won't be your first and last investment). This will save you ton of money, time and efforts if you are planning to add more properties in future.

Not sure about Pennsylvania but it is allowed in most of the states so you want to check it out first.

A series LLC is a unique form of LLC in which the articles of formation specifically allow for unlimited segregation of membership interests, assets, and operations into independent series. Each series operates like a separate entity. Each series may enter into contracts, sue or be sued, and hold title to real and personal property.

The most important characteristic of a series LLC is the liability protection that is available to each series. Assets owned by one series are shielded from the risk of liability of other series within the same series LLC.

Thanks!