Buying property with family

[Will Rodriguez]

Hi everyone, 

I'm looking to start investing out of state with my two siblings. All 3 of us make very good income and even after maxing out retirement accounts we have plenty to dive into real estate with. Unfortunately we live in NYC which means our money won't go too far, or the cash flow will not be good. We plan on buying out of state and having a property management company running the property.

I'm unfortunately also going through a lengthy divorce so obviously can't buy any property until that is finalized.  Trust will not be an issue with my siblings (and no I'm not being naive). To simplify the purchasing process we plan on only one of us taking out a loan for a property but have the ownership of the property distributed between the 3 of us depending on how much each one contributes to the down payment. I do have some questions about buying property with others.

1- Does it make sense to set up an LLC for this or can we split ownership without it?

2- We're most likely looking at buying 1-2 properties a year to start out, but possibly more. Does it make sense to set up an LLC for each one?

3- I can't have any property under my name until the divorce is finalized. How would I be able to obtain my share of the property after the initial purchase has been made, and what is the typical cost?

4- Is it a better idea to use the cash flow to further pay down the mortgage on a property or to just use it to eventually make more purchases? I understand people generally like to save some of the cash flow for vacancy and repairs, but we earn enough that having to come up with cash quickly won't be an issue.

Thanks for the feedback and glad I found this community.