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Updated over 9 years ago on . Most recent reply
Partnership Structure Question
My husband and are aren't totally new to this (we have 3 rental units today) but are going to take REI to the next level. We are strongly considering partnering with another couple, a co-worker. My husband and I are commercial real estate professionals in our day jobs so would handle the RE side of the business. Our partner would handle the GC side of the business.
Wondering how other's have set this type of partnership up. We're thinking a LLC. Structure options seem to be the following:
1) all inclusive with one partnership that does everything under one company, gets paid, pays expenses, split 50/50, etc.
2) three separate companies- partnership pays operating costs of individual (RE and GC) companies, with profits going straight to partnership and only minimum overhead to other two businesses.
3) partnership paying out both business at full retail value of those services? If so, how do you breakdown those costs. RE is a little easier as there are industry standards. GC gets tougher. Also GC is tougher because we'd all be working together on the flip. Though there are clear GC only tasks such as permitting, sub management, inspections, etc.
Any feedback would be appreciated. Any thoughts on partnership pros and cons in general would be welcome also! Thank you!