Investing with Family: Splitting Short-term & Long-term Benefits

[Peter Dunne]

As with many BPers, my obsession with real estate leads to many fun conversations at family gatherings. Over the past three years, a family member on my wife's side has become increasingly interested and even reads books I recommend (Even technical ones like "Loopholes of Real Estate"). Our conversations recently got very real, exploring the possibilities of using this money to invest in multi-family, such that my relative gets short-term cash flow and tax benefits, but that the equity growth and future ownership would fall to my family. I would help locate and manage the investment.

Essentially, we would want to hold title as joint tenants, such that title would pass automatically upon death. However, we would want to hold the real estate investments in an LLC to protect everyone's other assets.

Are there ways to structure LLC ownership such that it performs like joint tenancy? Or would you recommend we keep it it clean and set up a debt arrangement such that my relative gets the desired cash flow, but we maintain full ownership of the property? We are talking around $100k of cash.