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Updated over 8 years ago on . Most recent reply
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Partnership LLC for House Flipping
Hi all -
Do you have any tips on the best legal structure on partnering for a fix and flip?
I met with another rehabber yesterday, and we'd like to pool funds together. We'll be using hard money on most flips. Our plan was to both personally guarantee the loans, split the costs and split the profits on each flip.
I believe a simple two member LLC is the easiest way to do this, filing 1065 at the end of the year and schedule K. Then, we'd simply sign an agreement for each project outlining the financial responsibility and ownership percentage. (I know these agreements can get quite detailed in the "what if" scenarios, but best to keep this simple to start).
Does anyone have any tips here?
Thanks!
Most Popular Reply
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Consider each one of you setting up your own LLCs and then each of your LLCs taking ownership stakes in the partnership LLC. This allows each one of you to maximize your tax efficiency (by electing S or C Corp of need be) while not affecting the other partner's personal tax position. This also provides max flexibility as the partnership entity is an LLC.