Partnership - Form an LLC?

[Anthony Vargas]

Hello BiggerPockets!

My business partner and I are finally ready to get started in real estate investing through the BRRRR method here in Minneapolis. A realtor friend recommended that we form an LLC for our partnership. Is this common practice for partnerships? What disadvantages, if any, are there to doing this? What should we be considering before following through?

I know there are issues with lending to LLCs, but can't we get around this by transferring the properties from our names to the LLC?

Thank you I’m advance!

[Christopher Hill]

Hey Anthony, congrats to you and your partner! I'm not an expert but I can take a shot at part of your question. In terms of the llc, I think it's a good idea and that you and your partner put together an operating agreement with the lawyer so you guys know who is responsible for what.  Who pays this, who fixes that, how is money split (cash flow/appreciation), who handles tenants, etc. Great way to hold everyone accountable for day to day and if anything happens and a common practice to protect yourselves.

Hopefully someone else can chime in on the lending. I think for a single person, the loan can be in your personal name. Not sure for multiple people, maybe in one of yours, I'm not an attorney. You should definitely ask your attorney though when you set up your LLC about this.

Best of luck!