Updated almost 13 years ago on . Most recent reply
Is this the correct LLC strategy for a flip?
Tom and Jim have plans to buy a house to rehab/flip or rent
Tom already has an S-corp established for his existing real estate company. Jim wants to establish an LLC for his company.
Tom and Jim both agree to have an attorney draw-up an agreement that states each of their responsibilities (financial & other) and how to split the net profit.
Question #1 - Is there a name for such a legal document?
Question #2 - When Tom & Jim buy a house together, do they create a 3rd LLC?
The purchase price is $60,000. Tom and Jim agree to split the 20% down payment at the bank ($6,000 each) . . . the loan will be in Tom's name (not his company name).
Tom will order materials, arrange contractors, pay monthly mortgage/utility bills.
Jim will provide the $15,000 in cash needed to rehab the property.
Tom = $6,000 initial cash (plus) time = $6,000 cash outlay
Jim = $6,000 initial cash (plus) $15,000 rehab cash = $21,000 cash outlay
Question #3 - how would the deed read?
Question #4 - what am NOT thinking of?
We will meet with an attorney but curiosity killed the cat until then.