The Groundwork

[Chase Hildebrand]

I am new to the forum, but have been doing a lot of research.  First off I will describe my situation as best as possible

My fiancé and I are looking to get in to real estate.  Future plans are passive income with rental properties and starting a property management company for our properties and others. 

For the short term we are looking to flip a house(s). Her dad would be able to lend us the money and split the profits after the sale of the home. All he would provide is the money and we will be doing all the work and hiring done the things that aren't feasible for us, if any. I am looking at starting an LLC in order to get my contractors license to be able to apply for permits if necessary.

So my question is what is the best way to approach our situation.  I am planning on talking with a CPA to discuss the details, but want to get a better understanding from the people that have done this before. 

Should her father purchase the house and materials, we do the work for free, and then split the profits(losses.... I am realistic so I understand the risk)?  Or would it be best to have him loan us the money in some way and we do everything and pay him after the sale?  Any other ideas on this?

How do you structure a private money lender?  Is there something easy that could be done being that it is family and not an institution?

I do not know how much we will make or how often we will be able to acquire and rehab houses, so I am not sure if we should just take the profits as regular income or set up the LLC as an S-Corp.

I am sure I have forgot something or made things unclear.  If you need more details or other info please let me know.

Any help is appreciated.

Thanks,

Chase

[Sandy Uhlmann]

Hi Chase,

I believe in Missouri you have to have a brokers license to manage property other than your own.  If that is part of your long term game plan, either you or your fiance will need to get their real estate license first.  I believe that you have to have your real estate license for a couple of years before you can get your brokers license.  You might want to check into this.  I could be misinformed.