Partnership Help

[Chris Torbert]

Hi all,

My father and I have located a couple of properties that we would like to purchase together. I need him for additional capital, and since I'm investing with my Roth IRA LLC, I need him to personally guarantee the loan (since I cannot according to IRS). I bring the deals to the table, crunch all the numbers, and do the negotiating because he doesn't have the time. We fit very well together in terms of what we bring to the table. So, my question is this:

We want to purchase a property that is owned 50% by my father and 50% by my Roth IRA LLC. We would be splitting the down payment, getting a loan that is personally guaranteed by my father, and splitting all of the profit at the end of the year. Do we need a state recognized entity/partnership, or can we just have a lawyer draw up an agreement outlining the above? Also, does anyone know if there are any restrictions regarding partnering a Roth IRA LLC in this manner? Any thing else you all can think of that I am likely missing?

Thanks in advance,

Chris

[Steven Hamilton II]

I would avoid doing this at all. The reason is you are looking at a possible prohibited transaction with one wrong move, you are better off doing this with a sibling.

If you do go forward I would use a legal entity, keep DETAILED BOOKS and be 100% sure that your IRA can fund 50% of major repairs etc.