Investing with a Friend / Creating a Company

[Neil Goldman]

BP friends, seeking your advice. A friend and I are diving headfirst into real estate investing. Our goal is building a successful investment portfolio. I bought/financed our first rental. He bought/financed the second one. Both units were bought as individuals (as I've learned its hard to finance under a LLC). Now, I'm trying to see if I can bundle everything under a LLC for asset protection. Here is what I'm trying to decipher:

1. With mortgages at big bank(s), is it possible to shift these properties under a LLC?

2. If not, do you recommend adding each other's names to the title(s)? Any other recommendations?

3. Is a biz bank account necessary - or can we flow finances thru a standard consumer checking/savings account?

Obviously, we are building operating agreements to protect the partnership.  My concern more so relates to liability ensuring both of us are protecting our other personal wealth/investment/businesses.

[Jon Pitcher]

I wouldn't necessarily use an LLC here - if you transfer ownership of the properties, you trigger the bank's right to call your loans due. You could just contractually agree to share income and expenses and keep separate ownership of the properties. And use insurance to mitigate the liability risk.