Partnership question and use of debt

[Trevor Lohman]

Hi BP,

I have a quick question about partnerships,

I know there is a lot of info on here about LLCs and partnerships, but I always walk away a little unclear after reading. 

The idea of pooling money with like minded people is very appealing to me. I've bought a couple houses on my own now, but I like the idea of having a group of people with aligned interests and varied skills. Not to mention it seems like a great way to raise capital and do more deals more quickly and therefore gain experience faster. 

So... a friend of mine and I are thinking about doing a deal together. A small one, (one that won't devastate our friendship if things don't go well). 

The hope being that we will do more of these deals in the future and develop a portfolio. Maybe someday even bring on new investors and do even more deals. 

So.. this seems like a situation where an llc would be beneficial. I know it isn't necessarily required, but it seems like a good vehicle to write up a clear strategy, divide ownership, and mitigate risk.

I know an LLC can't purchase a property. I also know about the due on sale clause (Which is rare on performing loans correct?).

So... here's my question. Would the best option be to put title and the mortgage in both of our personal names? Can we then transfer both the title and mortgage to the LLC? I would assume we can transfer title, but it doesn't seem like we could transfer the mortgage. That seems like a turbotax nightmare lol, time for an accountant I suppose.

The other option would be for us to just pay cash which is an option as well and would eliminate a lot of these issues. I like the idea of leverage though. We were thinking of starting with an initial 100k investment. Maybe we start paying cash for one property and refinance? But then we're back in the same boat of an llc not being able to take out a mortgage correct? 

I'm curious if anyone has ever set something like this up with a group of friends or like minded people and how it worked for you. Also opinions about the use of debt versus cash in a partnership llc. 

This was something I thought I understood pretty well, until we actually started talking about going about doing it lol. 

Thanks for any advice guys, I appreciate any feedback on a topic that I know has been hashed out numerous times on this site. Now that I'm actually doing it I just want that personal advice if anyone is kind of enough to offer. 

Thank you all!