LLC Structure Before First Flip

[Jesse Anderson]

Good morning! I was reading through several posts and thought it best to find expert advice in regards to LLC structure and taking on investors for flipping projects. I am just starting out in Jacksonville, FL and hoping to pick the brain of someone with far more expertise than I. If you have a moment I'd greatly appreciate your advice and insight.

My wife and I set up an LLC to purchase foreclosure properties around the Jacksonville area. We are trying to do flips on our own, but also potentially take on projects with a friend down here. Structurally they have come up with the idea that we use our LLC, she creates an LLC and then we contribute funds from those LLCs to a joint LLC to purchase properties and fund the renovations.

To me, it seems like a better scenario to have her friend as an investor a write a note with her commitment (50% of renovation costs) and her payoff (50% of profits, while we take 50% plus the commissions since I'm a Realtor). What is your advice on a legal and ethical arrangement that's best for all parties? Thank you for time and help!