Structuring Your First Partnership?

[Alexander Burkard]

Hello BP!

My brother and I have decided to form a partnership to jumpstart our Real Estate Careers. And we are well on our way of having a solid foundation. 

We've discussed goals, processes, consequences, and strategies to get where we want to be.

But, something did come up that I didn't' have the answer for, so I'll drop them below. Any help would be greatly appreciated. 

• Him and I intend on purchasing properties in our name, and eventually transfer to an LLC. Is that a good approach, and/or legal?
• What are some things you wish someone told YOU, before you got into a partnership?
• If my brother and I purchase a property in our names, how can I include my wife on the deal if something were to happen to me? 
• What are your deals based on with a partnership? For example, every deal is 50/50, or it varies on the amount of work/effort put in from each person? 

Appreciate any advice or criticism! Thanks for taking the time to read. 

-Alex B. 

[Chris Tarpey]

Some may have different views, but every partnership I have done, always was in the name of an LLC. Doing so, also answers questions 2 and 3 because it would be outlined in your operating agreement. An operating agreement has very specific details as to what each partner contributes/brings to the table, as well as what should happen should one partner become deceased/incapable of upholding the partnership responsibilities.

Setting up your LLC and keeping things out of your name provides some level of protection should something go wrong. If you are going to be purchasing multiple properties, in my opinion it is the way to go.

It also becomes important when you look at how you are going to fund the deals. For example, if you decide to use hard money lenders, most require you to have the property in an LLC.