LLC Partnership Set Up - Early Exit Ideas, clauses or startagies?

[Daniel Dietz]

Hello All, 

We are working on setting up a new LLC/Partnership for buy-n-hold rental investing that will have two members. In the past our other LLCs have had 3 members, so 'tie votes' were always a simple majortiy .... nice and simple :-).

One member will be the Private Investor that brings all the down payment, and the other member will be our existing 3 member LLC that will do all aquisition, management etc.... Things will be split 50-50. Our goal/plan is for at least a 10 year hold, partially because that is how long our loan rate is locked for and long enough to build some equity.

What I am wondering is what you all have used, seen, thought of for 'early out' ideas, clauses, etc.... As in what if one of use wants to get out 'early' for whatever reason. The simple solution is if the other memeber can refiance on thier own to simply do a buy out at that point. But what if due to a declining market, rising interest rates etc... that is not feasable? 

Our exsiting 3 way LLC has a great track record, and our Private Investor does not see any need for these funds before that, BUT it is always good to be prepareed for the 'what ifs' I think.

Thanks, Dan Dietz

[Carl Fischer]

@Daniel Dietz

Split the assets, 

pay out over time, 

One partner sets the price on the property the other gets to choose buy or sell it to other partner. 

Identify a 3rd party now, that both respect, to cast the deciding vote. 

Can either party sell to an outside entity? You don’t want to work with just anybody. 

May also look at life insurance strategy if bus hits somebody.