Checklist for out of state BRRRR partnership

[Alessandra Verbena]

Hi All,

I could really use your expertise to help me with my checklist for establishing a partnership with an out of state investor.

We have an exciting opportunity on the table to rehab a single-family, do a cash out refinance, and hold long-term as a rental property. I will be partnering with an experienced real estate investor who found the deal and will be the "boots-on-the-ground," overseeing the rehab and has the property management contacts. My role is that I will be putting down all the cash to purchase the home and that will be used to rehab the house. We already have an estimate of repairs and will order an appraisal.

We have never met in person and he is (young) and experienced (50+ doors) in 50-50 OPM (other people's money) partnerships. I have checked some references he provided including the property manager he works with. I am running a background check per the smart advice of a real estate investing webinar I watched when COVID first hit and he shared with me a draft of an LLC operating agreement that he used with another investor. I reached out to a real estate attorney to review and put the operating agreement together.

My first question, is there any legal repercussions for simply forming the LLC with or without the real estate attorney's help? I will obviously have the real estate attorney review our OA and was planning to have him help with the formation of the LLC, but I don't know if there are any reasons to have the attorney be the one to do it. He claims that we can simply start the LLC for $100 online and that it isn't necessary to have the attorney involved on that end of things. Is this true?

My second question and the part I am most confused about is the handling of money and bank accounts. I have the money in a personal online savings account, so I will need to transfer the money to the title company to purchase the house in cash, I am assuming. But does this money need to come out of a business account? Does the business account need to be named after the LLC? Does it need to be a joint account with the partner or can it be separate? If these are too many questions or if this sounds too naive, can you please direct me to a resource, i.e. book, article, or forum, that can educate me on the transaction side of things? He explained that we will need to establish a business banking account to funnel the rental income and I believe also the cash out when we refinance.

Any support is greatly appreciated! I have read about BRRRR's in the Brandon Turner Rental Property Investing book but it doesn't go into detail on partnerships and the transaction side of things.

Thank you!