Politics, Religion and Business w/Family...

[Matt Gilroy]

Maybe the three most controversial conversations!  I'm looking for help with the last one.

I'm looking for input from folks who have partnered on deals with a formal arrangement. JV, LLCs, Partnerships (general/limited) etc. What are things to be wary of when forming a business partnership with family?

My situation:

My dad and I both are interested in partnering together. We understand this will be a business relationship and both want to be formal about it. We plan to purchase a house BRRRR style and ideally keep the momentum going with several purchases to follow. Knowing that we are looking at starting with 1 SFH, what are some best practices when laying out an agreement? Is a JV better than a partnership? Are there things to consider and write out that we might be overlooking?

We have discussed utilizing a HELOC (in his name) and eventually refinance into a 30 year mortgage (likely in my name).

I'm open for questions and comments!

Cheers,

Matt

[Account Closed]

Originally posted by @Matt Gilroy:

Maybe the three most controversial conversations!  I'm looking for help with the last one.

I'm looking for input from folks who have partnered on deals with a formal arrangement. JV, LLCs, Partnerships (general/limited) etc. What are things to be wary of when forming a business partnership with family?

My situation:

My dad and I both are interested in partnering together. We understand this will be a business relationship and both want to be formal about it. We plan to purchase a house BRRRR style and ideally keep the momentum going with several purchases to follow. Knowing that we are looking at starting with 1 SFH, what are some best practices when laying out an agreement? Is a JV better than a partnership? Are there things to consider and write out that we might be overlooking?

We have discussed utilizing a HELOC (in his name) and eventually refinance into a 30 year mortgage (likely in my name).

I'm open for questions and comments!

Cheers,

Matt

If you must, I'd use a clearly written out JV Agreement for each property. Your LLC can do a JV Agreement with his LLC. Use an attorney. Then you want to have umbrella insurance. OR, you can have a JV Agreement with your Dad and carry umbrella insurance. It depends on what kind of real estate investing you are doing.

Partnerships have too much liability risk for each of you so it is unwise to use them.

That being said, my son and I jointly buy and sell based on a handshake and on the fact he still wants to vacation with us for Thanksgiving and Christmas. ;-) When we (our LLC's actually) do a project together we split the project, costs and profits 50/50. (Gasp! No contract? That's right.) Everybody else I have a very well written JV Agreement with.