Author Topic: Advice for a 3 person partnership?  (Read 827 times)

tb43

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Advice for a 3 person partnership?
« on: July 19, 2015, 09:41:40 PM »
Hey all,

Looking to start investing in some long term rental properties to get a different source of passive income. I will most likely have 2 other partners..any advice on structuring this partnership would be greatly appreciated. An LLC seemed to be the obvious choice for  the properties until I realized that it is much harder to get any sort of financing. Our first property would be paid for in cash for other reasons, but would like to leverage as much as possible down the road. Can we just have 3 people on the deed and have a good insurance policy instead of an LLC?

If it seems like I haven't done enough research yet, that's probably because I haven't! I just find the MMM community to be very helpful and I value the input from this forum. Any other tidbits of advice would also be appreciated (how to handle the bank accounts..etc)

Thanks!

KBecks2

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Re: Advice for a 3 person partnership?
« Reply #1 on: July 20, 2015, 05:36:26 AM »
Check over at bigger pockets.com     Partnerships can be hard!   Be thoughtful and make sure the people involved are stable.

zephyr911

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Re: Advice for a 3 person partnership?
« Reply #2 on: July 20, 2015, 10:47:11 AM »
Hey all,

Looking to start investing in some long term rental properties to get a different source of passive income. I will most likely have 2 other partners..any advice on structuring this partnership would be greatly appreciated. An LLC seemed to be the obvious choice for  the properties until I realized that it is much harder to get any sort of financing. Our first property would be paid for in cash for other reasons, but would like to leverage as much as possible down the road. Can we just have 3 people on the deed and have a good insurance policy instead of an LLC?

If it seems like I haven't done enough research yet, that's probably because I haven't! I just find the MMM community to be very helpful and I value the input from this forum. Any other tidbits of advice would also be appreciated (how to handle the bank accounts..etc)

Thanks!
I co-founded a 3-member LLC in April of last year to invest in rental property, and we haven't had trouble with financing. Normally, banks require LLC members to personally guarantee any credit issued to the LLC in its first 2 years of operation, which we've done. After we file our second tax return and are showing enough LLC income for the partnership itself to qualify for new loans, personal guarantees won't be needed, and then we can refinance without the personal guarantees (and probably will).

The minor annoyance of personal guarantees lasts for two years. The added protection of limiting individual losses to actual funds invested (in our case, $20K each) lasts forever.
I am not a cog. I am an organizational lubricant.