Partnering with high w-2 income on multi families?

[Mike Curadossi]

Hello Everyone,

So I just lost out on a great 3 family because I couldn't make a 1031 exchange work with the sale of one of my existing rental properties in time.  It made me think of other creative ways to potentially buy so I don't miss out on another deal that would have positive cashflow of approx $2,500 a month.....

I was talking with a friend of mine that makes $400k plus a year and he was telling me he gets killed every year in taxes and needs a way to shelter income.  I have been thinking of this strategy for a while but not sure if/how it would work...

Here is what I am thinking...

Partner 50/50 with a high w2 income individual in and LLC.

Partner pays 25% down payment to purchase property and in return gets:

- Write off all expenses (including maintenance, mortgage interest etc)

- Write off all depreciation

- 50% of equity

I would get and responsibilities would include:

- manage property and tenants

- manage all maintenance and renovations

- do all billing, collect rents

- I would get 50% equity and all income from rents

The only downside for me would be that I would show a lot of income on the property that would be taxable, but who cares its money I wouldn't be able to have if I didn't buy the deal.  My partner would be able to claim all the write offs investors get from owning property and lower his taxable income while having the future benefit of equity growth, mortgage pay down and appreciation.  If we get a decent amount of these, we could get his taxable income way down.  Not exactly sure what his return would be percentage wise but this completely hands off investment may be worth it to him?

Thanks in advance for the help.

Mike