Best way to purchase RE as a family?

[Daren Card]

I wondered if anyone had any guidance on the best way to deal in real estate as a family unit. I have pitched to my family (parents/siblings) a situation where we invest in properties that cash flow, with the goal of having a little bit of income to offset personal expenses (was thinking primarily of student loans of my siblings and I). Hope (pre-COVID19) was to go after BRRRRs (or close), which allows us to essentially trade the balances on student loans for the low/no investment on RE once we have enough cash flow to cover all payments for years to come.

Our family home is paid off, so my plan was to use any equity we can extract from that as working capital for acquiring properties. Currently it is in the name of my parents, who have owned it for a little over 30 years.

So what I'm hoping for is some idea of the best use of LLCs, trusts, etc. that allows my family to do this as a group. Whatever entity it is must be able to borrow against the equity in our family home, ideally without the complexity of transferring ownership or anything like that. Then the entity must be able to purchase, renovate, and lease/manage the new properties as a rental. Part of this process would be to (re)finance the rental as an entity to keep recycling the working capital from our family property. Lastly, the entity needs to be able to take the cash flow and distribute it to different family members in some reasonable way for personal expenses. Ideally, there is some legal separation between each member of the family and the entity for legal/liability reasons.

Hopefully that is all clear but happy to clarify further. I have some ideas of what might be involved - I suspect an LLC will be necessary but struggle more with whether a family trust is necessary. The situation of an existing family property combined with this new venture also might make this more complicated than if this were a brand new venture. Any thoughts are greatly appreciated and will allow me to be more prepared for working with a lawyer/accountant, which will certainly be necessary at some point.

[Daren Card]

@Carl Fischer Thanks so much for the advice! I had secured general buy-in from family members on trying something like this, but we have not yet dug into the more detailed questions/points you raise. There are definitely some differences in mindset, financial position, etc., so it is important to make sure everyone is on the same page with a joint family business venture. Your alternative approach of having everyone get their own RE might be a good idea too that I can consider further.