Purchase/llc question

[Clayton Hutton]

Hello all,

  I had a question hopefully you guys could give me some guidance on. I am interested in purchasing a rental out of state. I live in San Diego, so starting here would be pretty difficult. I have a very close friend I've known about 20+ years who lives in the area I want to purchase in and they are willing to go in on the deal with me. I'm curious if the property was purchased in their name ( I'm working on getting a home here, so I can't go buy a home out there before hand and buying one after the fact would also prove difficult.)

Would my future business partner be able to purchase the property in their name and set up an llc with the both of us listed as equal paid partners. We plan on purchasing other properties down the line either in on or the other's name and/or combined. We would like to be able to do some of the programs offered through Fannie Mae. With the income generated from the rental over time so were wondering would we both be able to claim that income as rental income if the property is only in one name? Would we be better of putting the properties in both our names for the sake of the llc or can we get away with just the one? Trust between partners really isn't an issue, we're trying to get a feel for how getting a partnership real estate joint venture going.

[Justin R.]

You don't have to be 50% on the loan.  @Charlie Fitzgerald 's point was just that any liability you have has to be disclosed to the lender unless you plan to risk fraud.

Any loan made to an entity will require personal guarantees from the entity owners (at least until it's way bigger than you'll grow it).  And, if you're guaranteeing a loan, you'll need to disclose.

Also, one piece of advice: if you go the note route, your lender will likely want a history of payments or evidence on your tax return before they recognize the full income from the note.