How to structure LLC for BRRRR partnership?

[Grayson Graham]

First of all, thank you for taking the time to read about our specific situation. In the past I have simply registered my own Oregon LLCs without much thought/effort, but it looks like this time I may need a lawyer. Before I start paying a pro by the hour, I would really appreciate some guidance from the BP community!

My good friend @Alex McIvor & I are starting a new venture together and are unsure about the best way to set up our LLC. Our goal is to use $100k in capital to buy, rehab, rent, and refinance at least two cash flowing properties in Indianapolis per year indefinitely. Thanks to the BP community we have made a lot of progress towards putting together our team and are planning a trip to Indi later this month, but now I'm getting sidetracked...

What is the best way to structure our new company? Should we form an Indiana LLC since thats where we will be investing? If so, will my partner (who is a resident of California) still have to pay the ~$800 per year California LLC tax? Should I hold my half of our new LLC in my existing Oregon LLC that I use for other real estate investments?

On a similar note, any tips on good clauses to include in an operating agreement for a venture like this?

[Eamonn McElroy]

@Grayson Graham

Definitely use the services of a good attorney to draft the operating agreement.  The attorney will generally have a template of the necessary language, but a CPA may have a thing or two to add.

An LLC taxed as a partnership will generally be the most advantageous entity for holding long-term rental real estate. There may be a wrinkle or two if your partner is a CA resident and a member-manager. CA has debatably the most aggressive department of revenue in the country. There's nothing they won't try to tax if there's any connection to CA, no matter how slight it may be. You and/or your partner's CPA should be able to add more color.