Buying Rentals with Friends in Different States

[Brent Parsons]

Came over here from ChooseFI - glad to have found this!

I’m part of a group of 4 friends who all have stable (but demanding) jobs who are looking to diversify our investments from the standard pre-tax/401k and taxable fund investing by investing in real estate. We’re all well versed in business/finance but none of us have invested in real estate before. 

We all live in different states but keep in close contact. 

The investment would need to be passive and we wouldn’t mind giving up some gains by hiring a property management company.

We are all good friends and see this as an investment opportunity as well as an opportunity to do something different (and dare I say fun) together. We understand the dangers of going into business with friends so would have a formalized partnership agreement.

We’re leaning towards investing in single family residential (rental/buy and hold), but that’s more because it’s what we know than anything. We are open to multi family too. Any advice on how to set up the partnership, where to invest (in one of our markets, all of our markets, an outside market we are not a part of, etc.), financing the deal (we all have cash for a down payment), taxes, etc?