First House Flip With Father-In-Law

[Dan ODonnell]

Hopefully the title of this post has drawn a few of you in to help me with some serious questions here. I sure do need it. Lets starts with the layout of the situation  as it isn't your average investment scenario. Please take everything I say in to consideration when answering my questions, thank you. 

Okay I will be investing in a house at the end of this month with my father-in-law. The house is a cheap rehab property that needs a lot of work. My father-in-law will be purchasing the property cash (about 40,000) through his LLC. I will be paying for every cost we put into the house. Everything from supplies, labor, contractors, permit fees etc. The cost of the rehab is my financial responsibility which we estimate to be equivalent to his investment (40,000). Understand we both will be putting in an equal amount of time, effort, and labor. Though he has more experience with rehabbing this is not something you need to factor in to your answers as it isn't something that will influence or affect our agreement financially or at all. We trust each other and are on the same page with every aspect of this house. I am here looking for experienced help as this is our first time investing together and we want to avoid any possible future turmoil as we are family. We would like to do this by making sure we are both comfortable with our partnership legally.

A few more details before asking my questions. Understand that I have spent the last few years working for him rehabbing propertys. I have always been paid cash meaning all of my investment money is also cash. I store this money in a safe as I have no legal job on paper as I file no w2 or anything of the sort. You can see why a partnership with my father-in-law is perfect for my first house flip. Okay, now for your help.

How should we go about this legally to protect the both of us? Should we both be on the deed? If so can I be on the deed as an individual and he as an LLC? Or should I form my own LLC/S-Corp to be added to the deed as an equal entity? I am told we most likely want a Tennants In Common agreement where we equally share 50 percent and all of our individual terms will be written into a separate legal contract. We both want to sell the property as soon as it is finished. We would like to each get back our initial investment and split the profit. Is TIC a good idea for our situation? If so should it be done as 2 LLCs for the best tax benefits for the two of us?

Please give me your honest opinion and experiences input as it will be greatly appreciates. Hopefully I explained things properly and you take the situation as a whole into  consideration when answering.