How do partnerships work?

[Barry Je]

Let's say a couple friends and I want to invest together, and all three of us live in different states.  How does one go about this?

Will a bank lend to three unrelated people? Can we quit deed claim into our LLC? Right now I'm using a large umbrella policy to protect myself with my property after a quit deed claim. Can that be done with three people on the LLC?

What if they gave me 1/3 of the down payment each, and I got it under my name. Can i then quit deed claim it into our joint LLC? then the next one they do it?

I guess my question is...you and a few friends are creating an investment group for SFR's. What steps are required to make it happen? To keep us legal and protected from a liability standpoint?

[Matthew Ries]

I am involved in a partnership. We have an LLC, but were told we can't get a conventional loan in the LLC's name.

So, we bought a property with cash in the LLC's name (bad idea in retrospect because we can't cash out refi it and it hurt our scalability).

Now, when we buy a property - it's bought with a conventional loan in one of our name's and the other parties involved transfer money into the LLC account (then into the buyer's account). This has drawbacks too, when the mortgage company looks for the origin of the money.

Hindsight is 20/20...I wish I had been more patient and just started investing in real estate by myself.  @Tim Shiner once gave me some good advice..."A couple friends can rarely agree on the same place to eat dinner, let alone make decisions to run a business/invest in real estate!"