Parntership

[Account Closed]

Hello, BP members!

I got a question - me and my friend want to find a property (duplex,triplex,fourplex) and do the house-hacking together. 

For that, we decided to do a partnership - 50% / 50%.  

I got a question as a newbie - can we  proceed with agreement before we find a potential deal? 

If so - any recommendations for attorneys located in LA?

Thank you for all replies!

[Chris Ramos]

If your using traditional financing then you would complete the purchase as an individual and then transfer title into the LLC's name. I don't think a trust is the right direction when partnering even if you're going to hold it long term and if you're thinking of taking title in an LLC and then transferring it into a trust might be a little overkill.

If your getting private financing then you can take title in the llc's name from day one, your lender may require a personal guarantee from each of you as private individuals but they won't care how you take title.

The advantage of the LLC is in having an Operating Agreement that explains the roles of the members of the LLC, it's helpful especially if you have planned ahead for Buy Out situations between members. There's a good chance one of you will want out of the deal before the other one is ready or before the predetermined time and if you have a pre-planned solution then it eliminates all kinds of headaches between members. There are a lot of surprises that come up in rental ownership and there's also a good chance one or both of you will decide being a landlord is not what you want to do. The market could go up considerably and the original plan was to keep it ten years but one member see's the dollar signs and wants to sell or one member feels they are doing all of the work and get's burned out or one member is the money person and they feel like they are being taken advantage of or the costs are way higher than budgeted for. You get the point, bottom line is rentals can be tough and partners can be tougher or they can be fantastic! Sorry it got lengthy, I hope this helps and feel free to shoot me a message with any specific questions.