Newcomer from Issaquah, WA w/ Questions

[Jeremy Bohnett]

Hi all! Really excited to be here to learn and hopefully eventually teach as well.

My name is Jeremy and I live in Issaquah, WA and am 29 years old. I have been learning a bit about RE investing through BP and other sources these last year and it's about time I take some action steps. 

I have a couple very basic questions as I'm getting going (I know there are more appropriate Forum Categories to use for these questions, but I figured I'd get a hall pass for being new):

1. I live in Washington. My RE investing partner-to-be (if that's a thing) lives in Arkansas. We are scoping out deals in Arkansas and are getting closer to pulling the trigger. He currently has an LLC with another prospective RE partner open already. If he were to add me to the LLC, could just two of three LLC members invest in a property? Or should the two of us just open up a separate LLC for this property?

2. What's the best state to open the LLC up in this scenario? How long should we expect it to take for us to open an LLC, open and fund a business bank account, and secure a traditional loan? And is this everything we will need to do before putting down an offer on a property or is it more or less involved?

3. How does getting approved for a traditional 20% down loan work with two people in an LLC? We are both very familiar with how it works individually as we are homeowners, but not familiar has it works with the two of us with different incomes, credit scores, etc.

Thanks for your help with these. Looking forward to hearing back!

[Kevin Reynolds]

Hi Jeremy - Welcome to BP and REI!

I'm relatively new as well, starting really learning and studying REI about a year ago.  I picked up a property locally in Snohomish and I'm gearing up to make a purchase out of state as well, looking in Ohio.  

1. I don't have much experience here. I'd recommend forming agreements or LLC entities around the partnerships. Sub-dividing in the same LLC/entity can entangle you around tax time and dividing profits and losses. It can be managed, but might be more trouble than it is worth.

2. You can open an LLC in Deleware and will need to pay a company to be your registered agent. They've streamlined the process so you can form the LLC and get a number within days. Not sure about the banking and loan questions.

3. I assume trying to purchase through the LLC will be a challenge unless you already know the path forward. Likely you and/or the partner will file for a loan together independent of the LLC and then once you purchase the property and have things setup you can then transfer it into the LLC. Though I'll be interested to see what others say in response to this one.

I'm interested to hear what parts of Arkansas you're investing in.  I had looked at NWA, but could not make the numbers work for buy and hold cash flow.  Little Rock looked a bit better, but I'd have to do more research in the area and the market.

I hope the property purchase goes well and look forward to hearing more about your REI journey.