Business Structure - Partnership LLC

[Matthew Malley]

I recently started a STR business with two other partners and was looking for advice on how to structure the business. I've done a lot of reading into this and have seen the topic has been covered but I'm still looking for some clarity. One of my partners already has a primary residence and rental property but I personally still do not have a primary residence. If all three of us were on the mortgage, how would this affect my ability to get a favorable mortgage on my primary residence in the future? Between three people it seems like the DTI would be low but it would essentially eliminate me from obtaining first time buyer rates/mortgages. The partner who already has his primary residence seems to be okay with putting, at least the first property, under his name and having a separate legal agreement with us. But moving forward, it seems like inevitably I will have to be on a mortgage if we move forward with other purchases.

We plan on purchasing several properties over time but I'm unsure of the best way of starting the business from a structural standpoint. The other alternative seems to be putting the business under an LLC but some have said it might be best to start as a 2nd home and then form an LLC later and deed it over to the LLC. But doesn't that trigger certain clauses and taxes later on?

I've been reaching out to attorneys in an attempt to get more information on this, as well as drafting an operating agreement for us but I haven't gotten any response yet. We're in a bit of a time crunch and I've seen some solid information on BP so figured I'd put it on here to have a better understanding myself prior to speaking with the professionals. 

Thanks in advance to any insight.