Multiple properties with different partners under one LLC?

[Corey Meyer]

I currently hold a property in an LLC without any partners. I am getting ready to buy another investment property with the same criteria as the property in this LLC and would like them to be grouped together for financial reporting etc.

I will be purchasing this property with a partner. Can we buy with my current LLC that holds an asset my partner has no ownership in? Perhaps I can have my attorney draw up a partnership agreement for individual properties within one LLC?

Also, if the partner is carrying the financing, should I be on the mortgage? As a co-signer? Does it matter? In my knowledge it shouldn’t, as long as I am represented on the Title of the property.

I will be helping my partner secure financing and will walk them through the bank process. If we get a traditional loan, is it possible to get financed with a partner under an LLC?

My partner doesn’t have any real estate holdings and will qualify for traditional financing. I like the low rates and long-term loan as we are going with a buy and hold 5-10 year strategy.

Or is commercial lending the route to take with partners? The current property held in this LLC was financed by a commercial loan.

Thanks,

Corey

[Marty Johnston]

Hey @Corey Meyer
All great questions here - Let me try and pencil this out for you - see my answers in bold below.

I will be purchasing this property with a partner. Can we buy with my current LLC that holds an asset my partner has no ownership in? Perhaps I can have my attorney draw up a partnership agreement for individual properties within one LLC? What you would have to do here is draft up an Amendment to your original Operating Agreement for your Current LLC, and add him to that entity. Bear in mind of course, he will now also have ownership in your other property as well since you are blanketing all your assets under this entity. Some relationships are cool with this - others not (totally up to you!) Here's a link to a Free Operating Agreement Amendment Template you can use. Some lenders require notarized docs, but at least you can save yourself the legal fees.

Also, if the partner is carrying the financing, should I be on the mortgage? As a co-signer? Does it matter? In my knowledge it shouldn’t, as long as I am represented on the Title of the property. This will actually depend on your Lender's requirement. Some lenders require you be on the loan if you have greater than 20% ownership in an Entity. Some 15%, others anyone with 1%+ have to be on the loan. It all depends on their parameters, so you may want to ask your lender that question. That Amendment to OA I mention above? Well, it could affect how you complete that depending on your preference for being on the mortgage or just title.

I will be helping my partner secure financing and will walk them through the bank process. If we get a traditional loan, is it possible to get financed with a partner under an LLC? Your LLC can be "owned" by another LP or individuals depending on how you structure it. If I'm understanding the above correctly, you'd just need to add both you and the partner as 'members' of the LLC with the amendment, and decide on the ownership %'s of each member.

My partner doesn’t have any real estate holdings and will qualify for traditional financing. I like the low rates and long-term loan as we are going with a buy and hold 5-10 year strategy.

Or is commercial lending the route to take with partners? The current property held in this LLC was financed by a commercial loan. Well, in most cases you won't have a chose but to obtain a Commercial Loan for any property that is 5+ MF. 1-4 Units you can go either way (close in an LLC/Corp or in your personal names). If you're looking at MF with 5+ units, then Commercial is your only option.

Hope this helps!