Proper Entity Structure

[Keith A.]

We (father, brother and I) are going to setup a business to buy and hold real estate. I have read a lot of articles here on entity structure but do not know which one fits our scenario.

We have a large sum of funds available to invest and would like to setup the entity structure with all three of us as equal partners with taxes and asset protection in mind. We will definitely seek a professional but wanted to get your take before. The ultimate goal would be to use this business to replace our jobs down the road.

Also, in this scenario how do you finance loans with this type of business. Does the lender look at your personal finances including the business or only the business funds?

[Brian Levredge]

Your answer to the first part of your question is going to come when the three of your sit down with an attorney and lay out your needs and wants, as well as the individual responsibilities each of you expect to have or whether or not one or more of you want to remain as passive investors. There are different structures for all of those.

As far as bank financing is concerned, with a brand new company the lender is going to want to look at personal returns and in addition will more than likely require a personal guarantee from each of you.