Co-Invest through an LLC with other investors

[Constantinos Zavos]

Hello everyone, 

Ill try to keep this short, I am new to investing in real estate and looking for some insights. I recently went into a 50/50 LLC with a college friend to buy our first property in the college town we attended. That went really well and now we are looking to add 2 more people for a new property. We have some concerns:

1) Should we a new LLC and have our old one hold stake in it?

2) When using other people's money to invest, what is the best way to set up an agreement on a limited budget?

3) What would be the best way to get a mortgage on a new LLC, would our stake by our existing LLC create an issue for financiers?

[Erica Arce]

New LLC is the general consensus.

[Constantinos Zavos]

Thank you, very useful. What about if the original LLC has a fully paid off house in its name? Would we be able to collateralize that house (as a form of guarantee) to help on the financing of the new one?

Or would we have to write that house into the new LLC?

[Drago Stanimirovic]

Yes, you can use the paid-off house as collateral without transferring it to the new LLC. The original LLC can take a loan against the house's equity to help finance the new property. Transferring ownership to the new LLC is possible but may have tax or legal implications.

Let me know if you need further assistance with financing!