Structuring Investment Entity

[Heidi Cousineau]

Hello!

I am working on closing my first mortgage on a property in South Florida. I intend to househack or STR, but with my friend who will be my 50/50 partner. Can someone please share advice on how to do this the right way? I will hold the mortgage, but we will split all costs, form an LLC, and be joint owners of the LLC. I just want to make sure she has equal ownership, even if not on the mortgage.

In my research, im finding the watch out is that if we do a quick claim deed, the note could be called due in full. Any way around that or suggestions on how to structure? 

[Nathan Gesner]

Quote from @Heidi Cousineau:

What is your friend contributing to this investment?

First, you should recognize that investing with friends or family can be risky, which is why most people recommend you avoid it. It's hard to do business when a personal relationship exists. And if the deal goes bad, you lose them money and the relationship.

I would spend some time reading about partnerships and how to structure them properly so you don't get in a bind. How will profits be distributed? What if one partner wants to walk away? What responsibilities does each partner carry? What if they fail to perform? 

There's a lot to this and it shouldn't be taken lightly, especially with friends or family.

[Raymond J. Rodrigues]

@Heidi Cousineau, you mentioned house hack and STR in the same sentence, which to me sounds like you're buying this as a primary and intend to rent out right away. Mortgage occupancy fraud is at an all-time high right now and lenders are watching this like a hawk. If you are buying it as a primary, I highly recommend not quit claiming your property to an LLC. That would just be asking for trouble.