How Do I Structure a Real Estate Partnership with My Parents in California

[Alex Vidal]

Hello Everyone,

I'm 25 years old and I work in commercial real estate in San Francisco. I'm planning on making my first real estate purchase with my parents and we're targeting a single family value-add home in the upper middle class town that I grew up in and that my parents still live in in the East Bay.

We're going to be purchasing the target property all cash, making some improvements and then subsequently putting traditional financing in place and hold the asset for the long term. I will be a 25% equity partner in the deal and I was wondering how we should structure this arrangement? Should we be setting up an LLC with all of us as members? I know that an LLC is probably the safest route, but in CA it is very costly and I don't know if it's even possible to then subsequently get financing on an LLC owned SFR property after we complete the improvements. I additionally want to make sure that I'm able to reap the tax benefits of being a property owner. Lastly, regardless of what form of partnership we put in place I want to make sure that down the road we wont be hit with a reassessment for the property taxes, since that's a huge benefit to buying and holding in CA.

If anyone has any experience in forming this type of partnership in CA any feedback would be greatly appreciated. Thanks in advance for your help!