Question on structuring a deal with multiple investors

[Vivek S.]

Hi Folks,

I have been a member on this forum for a few months now and have learned a lot about RE investing by simply reading through various member questions/responses and articles.

I'm considering making my first purchase and have a question which I hope you guys could provide some advice. I'm looking to purchase a property with a few investors and we were initially thinking of forming a LLC. However, given the expenses of forming one and that the LLC loans comes with a higher interest rate, we have decided not to form a LLC for the time being. Further, we could simply purchase an umbrella insurance policy as protection for the short term. However, we will definitely consider a LLC after we purchase a few properties and expand our portfolio. The question I have is, are there any viable structures other than a LLC when multiple members are involved. For our first deal, we could pool our money and purchase a property and share the returns pro rata based on our contributions. I suppose we could use our collective credit to apply for a conventional loan. However, how could we claim tax deductions such as depreciation when properties are owned by multiple parties?

Thanks for all your advice and help in advance.Enjoy the weekend!