Private Investor Strategy & Questions

[Tanner Carson]

Good Evening BP!

Okay so I have 1 flip under my belt (net 19k)

I put all that money back into my current residence that we are deciding to make our primary residence after 35k of renovations, because we love it so much. My neighbor saw me working everynight late and came over a few times. This basically grew into him loving the work I did and wanting to invest in and with me. After a meeting today, we discussed numbers and goals. By January we want to initiate our plan. This doesnt mean rushing into a deal but being able to finally analyze deals with power to buy.

I have a bunch of questions i would love some help on.

What are some options when structuring a parntership like this, 50/50 a good route?

A major question i have is what happens after we sell the property? as far as taxes go, we plan to do multiple deals together, do we have to 1031 into the next property or how does that work?

I would love feedback and advice or even links to something to read.

[Dave Foster]

@Tanner Carson, on the 1031 front it all depends on how you own and report that property for tax purposes.  Many people have a "partner" but the property is really owned by each as a tenant in common.  If that is the case then at every sale you each have the opportunity of staying together and doing a 1031 on the entirety.  Or you can separate and each do your own 1031 on your %.

If your partnership is registered or if you own the property in an entity like an LLC or some other critter then that entity which files the return reporting the activity of the property is the tax payer and that entity has to do the 1031. So in that case you are stuck going forward together.

Probably the most common scenario I've seen with two casual partners is a tenant in common ownership with a master operating LLC. The LLC manages the property, and dictates the outcomes and provides some shield for the owners. The tenant in common ownership ensures that each partner can separate or stay together when the time to sell comes.