How to structure my 2nd deal only this time with a partner?

[Nicholas Lohr]

I just completed my first deal using all my own capital and it is within my single member LLC. For my 2nd deal I have potential partner who is willing to finance part of the rehab.

What is the best way to structure the 2nd deal from an entity perspective? I'd like to keep in all in the under the same original LLC business name yet limit the partial ownership and liability so that the new partner only has an interest in the 2nd deal.

My goal is to not have to start a whole new company with a whole new name etc... Is this possible?

[Account Closed]

The real estate will be owned 1/2 by your LLC and 1/2 by the other party. The JV Agreement contains the terms of that co-ownership. If you want it to say that when the project is completed, it will be rented, then it will be refinanced for enough to return the initial contribution of each venturer, and thereafter it will operated as an income property with the net income divided, then you put that in the Agreement.

Then each of you would use the returned funds to enter into another deal. But if that other deal is not mentioned in this JV Agreement, it would not be covered by the terms. You need a new JV Agreement with new terms. I just like JV Agreements because they don't involve any state agencies, reporting requirements, etc.

But if you are able to determine at this time that you are comfortable in a longterm relationship with this person, it might be better to have him also form his own LLC, and then have the two LLCs enter into a Partnership Agreement instead of a Joint Venture Agreement.

A JV Agreement is useful when you want to limit everything to just one project and then it is ended.

A Partnership Agreement is more useful for permanent or semi-permanent relationships.

You said you wanted to do the deal without forming any more entities, but not give anyone an interest in your LLC, and so I suggested the JV.