Buy-and-Hold Partnership Structuring

[Matt Souza]

Hey BP!

I am a new real estate investor about to close on my first rental property in Metro Detroit! I also have a couple other deals in the pipeline, so I want to make sure I have the partnership structure that will benefit my partner and I the most.

My plan is to join partners with my brother and start a real estate investment vehicle that buy-and-holds SFHs and multifamily properties. We are starting with SFHs just to get a few deals under out belts, create processes, and learn more about REI.

Our problem is we are not sure how to structure our partnership that will give us the most benefit. An LLC would be great for liability protection, separating our personal finances, and for easily tracking equity. The downside is we would miss out on leveraging better loan terms through conventional financing (as opposed to commercial). If we each start to put properties in our own individual names to capture the conventional financing benefits, then equity and profit sharing starts to get a little murky.

Does anyone have experience with this type of partnership? Any advice you could offer someone new to the REI world? Any feedback would be greatly appreciated.

Thanks!