All Forum Posts by: Gwendy Wolfe

That's great your sister is willing to go into with you. I'd recommend treating it like a formal business relationship through an LLC and an operating agreement that addresses the contributions of cash and services (services that are quantifiable in the operating agreement) as well as any disputes, how you treat/report taxes, what happens if the asset (the property) needs more capital to fix a roof or call a plumber, how to make day to day decisions, the ability to open up a bank account that is owned by the LLC rather than an account owned by you or your sister individually, and gives you a pathway to easier inheritance so you can leave your 50% (or whatever interest you have) to your estate. This way the business relationship has rules of governance. Other benefits of owning the property through an LLC you jointly own with your sister also provides asset protection protecting your individual assets from the rental and its tenants/guests if there's some slip and fall or someone falls from a roof, etc. Having an LLC as a partnership instead of running the business as a sole prop allows you to maximize tax deductions and lower audit risks.

I have thousands of clients who are doing the same thing and disputes between family happen all the time. The ones that come with clear operating agreements of an LLC to govern their shared ownership of a rental vs those that don't have a lot easier time managing the profit making side.

I hope this information helps! Good luck with the investment!

I don't think I have seen anyone mention this yet re: how to own the asset itself and take title with the asset protection and anonymity in mind. My clients invest all other the US. Making sure you set up a foundation to protect your business assets from your personal liabilities and your business liabilities from your personal liabilities starts at this stage. Here, OH is a state of anonymity so if possible form an OH LLC with the OH SOS, use a third party registered agent and an anonymous business address (no personal address or personal identifying information) to own the property and act as the landlord. That way if someone slips and falls, they don't get access to any cash or asset that the OH LLC doesn't ow. It also means if someone gets evicted, you are getting death threats to your home address (this has happened to so many of my clients). Using an LLC that's tax election is disregarded (or partnership if there are two owners) instead of an S or C corp, will allow you to benefit from cost segs and claiming depreciation as well as other business deductions you are going to incur and will want to write off -- even if you're running at a loss. All of my clients benefit much more from operating a company landlord vs as a sole prop. You can do this! Good luck with your investing!