Financing with Multiple Partners

[Kiuny Perez]

Good Morning Everyone,

This may be a silly question, I did try searching YouTube and BiggerPockets for this answer but I'm still a bit stuck. I have two partners, we want to evenly split equity, any cash flow, and expenses. Is it best for all of us to go on the mortgage together, or is it best for one person to go on the mortgage so the other two can still utilize the 10% down. If we have one person on the mortgage, can we still have a title company add the other names to the deed? Lastly, would we all be liable in the mortgage? Definitely wouldn't want one person to feel like they have all the risk.

I realize I may be jumping the gun, but I want to be thinking a couple steps ahead if possible.

Thank you for any kind of help!

[Carlin Randolph]

Hi @Kiuny Perez. It sounds like this project is a candidate for a joint venture agreement. PLEASE DO NOT download a free version online. That is a document best produced by your attorney. And when having that drafted, think first about what will happen if the deal goes sour and work your way backward to what would happen if it all went well.

Now, there is a right and a wrong way to do everything. For the right way, people usually say "thats so expensive." But the real costs come when you do it the wrong way and things go wrong.

I would say neither of you should go on the mortgage. Open an LLC structured for real estate and that LLC is going to apply for a mortgage. Make the 3 of you 1/3 partners. Thats one way.

Or, create the llc but make one person 94% owner. (That person will have to present documents for the mortgage verification.) The other two will not be listed on the mortgage but they will have 1/3 responsibility and 1/3 ownership of the deal as per the Joint venture agreement.

The other two will be free to get other mortgages and/or be the 94% owner of other llcs for another deal, because they will be minority owners having only 3% ownership each of the "LLC Partnership" for this deal. I think that was your question about the "10% you mentioned.

I hope this helps.... I hope this makes sense.
CR