Family Member Wants to Invest

[Liz Rogers]

Hey BP!

A family member has decided they want to invest some money in our real estate business to help it grow and to also (hopefully!) get some returns. We have an LLC set up and really want to start growing the business this year. She has come to us with the desire to invest a monthly amount that can used towards purchasing new assets or improving ones we have so we can increase rents. Does anyone have any experience with this? Does she need to be a member of our LLC? What kind of tax benefits/negatives are in it for both sides?

Thank you guys!

Liz

[Andrew Fielder]

@Liz Rogers there's a few CPAs on here that could probably give you a better idea. Depends on if S-corp or C-corp. It's typically at your personal income tax rates, but again depends on the vehicle structure.

Look in past forum posts/blog posts to get a better idea.

At the end of the day most will recommend you get a CPA to help you out as each persons tax situations are unique.

You could think about just structuring the money your family member wants to invest as a loan and pay them a fixed rate rather then give them equity. There's tons of things you can do but you need to rely on your own good judgement and common sense as you have the most knowledge of the situation.