Real Estate Partnership Advice

[Andrew Lake]

I'm a new investor with plans to purchase my first property, a house hack 2-4 unit in Chicago, in Summer 2021. My friend and I will be partnering on this deal with 50/50 contribution. Our down payment will depend on the price of the property, but we'll be using an FHA loan. I'm curious about how we should manage our partnership on this deal. I've seen that LLCs are a popular topic on the BP forums and have read through many discussions on the pros and cons of forming them for a first property, transferring loans to an LLC, etc. I'm just looking for any advice on managing the formal details of a real estate partnership with a friend/roommate. Thanks!

[Sarita Scherpereel]

@Andrew Lake this is a great question but the answer really should come from a lawyer. That said, most buyers I work with that are partners usually get a partnership agreement signed before putting in offers. Then after they purchase the property in their names they will switch to and LLC. I'm sure there are many ways to do this that will make both you and your partner confident that you've protected your assists. That is just how I've seen it most frequently done. But I'm not a lawyer so please discuss this with an attorney. Best of luck!