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Updated almost 5 years ago,
5/95 Percent Partnership For LLC with rental units
Hello,
Let say my brother, and I want to for a Holding LLC which will Owned a management LLC. I have 1 rental unit, and will be buying a second one, cash. The first property is on my name. planning on growing the business with more rental units, and possibly bigger deals.
My brother will own 5-10% and I will be own 90-95% of the business. Originally, I Was going to form a Single member with just me as the owner, but I am bringing my brother in because I want the LLC to fill a tax return so that few years from now it can help if i want to sale the properties or buy more properties as i will be acquiring more. He is not going to invest into the business, I am bringing him in just for the above reason (tax return for the LLC), hence why he's getting just 5%, and I can I go as low as 1% (if that wont raise a red flag to the IRS).
Now, I am not sure if we should be 5/95 percent partners on the Holding LLC, and Holding LLC with own 100% of the management LLC or I should be single member on HOlding LLC and he comes in as a member with 5% on the management LLC and the 95% be owned by my single memember HOlding LLC? He doesnt care how I structure it. I just want to know what would the pro and cons be with either structure.
I am also planning on getting portfolio loans down the road, and possibly do a cash out of the property that is 100% cash purchase.
Any issues i will run into ??
Any thought??