Partnership - Loans & LLCs

[Nick Intrieri]

Hey all - Looking for some friendly advice. About to sign on offer letter on a small multi-family investment property in New Jersey.

I have explored the use of a 50/50 partnership with a good friend of mine who will live in the property and manage it for us. Although I will put up most of the down payment, he will be in charge of managing the property and doing some of the rehabbing. We have set up a payment plan for him to pay me back his portion of down payment and have outlined all responsibilities. 

When it comes to financing, here is where I have a dilemma. Currently, I am personally pre-qualified for a loan through a conventional bank based on my personal net worth and income.  However for a partnership, my options as I understand them from my research are:

1. Setup an LLC with both of us as 50/50 partners. Work with my mortgage broker to either secure the loan under the LLC to start (with my personal income as guarantee) or secure the loan under my name first and transfer deed at a later date (running the risk of "due at sale" clause)

2. Secure the loan under my name; Work up a partnership agreement that splits the expenses and income in the 50/50 arrangement

3. Secure the loan under both of our names. Work up a partnership agreement that splits the expenses and income in the 50/50 arrangement

I prefer #1 but not sure if I can pull it off. Will be talking to my mortgage broker later today...

Any thoughts on this much appreciated!! How do others typically set up partnerships and loans?

Thanks

Nick