@Lionel Mosby Jr
This has been discussed several times before somewhat recently, but I can't find the threads right now..
First, most I believe use LLC's for the limited liability. A multi-member LLC is taxed like a partnership anyway by default.
the business structure is an exhausting discussion. You can take Title into one LLC, or use separate. I believe TX allows for series LLC's so that could be a route, but I hear the main issue is that they are so knew there is very little case history on it. Otherwise, for a fix and flip using separate LLC's for each property is nice because any "lingering" liability is tossed away with the LLC.
If you really wanted to get complicated, you could each form a single member LLC. Then, each of your single member LLC's would be a member on a multi-member LLC that took Title. this more complicated but gives high flexibiilty, in my layman's opinion. Maybe not all of you want in on the deal. Maybe your splits will be different on a specific deal. All of this can be addressed in the Operating Agreement of the multi-member LLC. Meanwhile, each of you has their own LLC for marketing/branding purposes if you should so care. Some people like the 1 LLC per property since its common to name the LLC the street address for the property. Makes it easier to keep track instead of using a bunch of fancy names. Here some posts I found quickly:
https://www.biggerpockets.com/...
https://www.biggerpockets.com/...
As for the splits, there are some discussions on that. In my opinion, it comes down to who is taking the risk. Everybody needs to be clear as whether they are "investors" or "workers." The former loses money when the deal doesn't work out, the latter still gets paid. Those "investors-wannabe's" who say that they will put in their labor for free but their subs and material costs have to be covered. To me, that's not an investor. One partner putting up the capital and the other "doing the work" usually doesn't work well either for real estate. Again, whatever one stands to gain must/should be what one stands to lose. As an investor, I don't get paid until the deal is completed and the property is sold (in the case of a flip). So, how does this "other guy" going to "cover the loss" if they never put anything in (and usually wants their expenses covered up front).
For some, it has worked donig 50/50 (for two people) because both sides are happy. Okay, I have no issue with that...
My point is you need to look at the risk, as well as the contribution. Many times, all those that aren't putting up funds really should just be paid accordingly to the "work being done." if you try to calc a percentage, its usually quite measely. If they are putting any "skin in the game," how can they be responsible for a loss? Again, investors can lose money, workers get paid...
I'd be happy to chat and save my fingers :) Just let me know. Otherwise, good luck.
