Buy & Hold deal analysis

[Inderpal Chadha]

Hello Fellow Investors

I am considering investing in a buy and hold with a friend. The details are below, please let me know if there are any legal or financial issues that I am missing.

1. My friend is buying a SFH with 15% down payment.

2. After closing, he will transfer the SFH to an LLC where he will hold 51% stake and I will hold 49% stake.

3. I will take this 49% stake by investing from my IRA (my IRA will be the member).

4.I will be managing the rental and all the fun that goes along with it. 

5. The income and expenses will be split as per stake in the IRA.

Do you see this as a workable deal from legal point of view. The IRA custodian I am planning to use is Real Trust IRA out of Washington state.

Thanks for your insight.

Inder

[Jassem A.]

I would talk to a local real estate attorney.  It might be safer to transfer to a trust and assign beneficial interest or to use a land contract that is not recorded.  A master lease is another option where his portion is the lease amount.  Some combination of master lease and contract for deed may be possible if it's done silently.