Let me say in advance thank you to all of you who will reply. I have done some extensive googling about this and much of what is out there is pretty vague. I have a few questions about how to set this up. My family (mother, brother, and me) are looking to purchase a rental property that needs some fixing up and pay cash (Many of the properties we are looking to do this for do not qualify for a mortgage because of the disrepair), fix it up, rent it out, take a mortgage out on it and use that to purchase another property and repeat the process.
The breakdown would look like this. My mom fronts the initial investment of cash, my brother does the fixing up and the maintenance, and I run the property management forever. We are looking for a even three way split on this and all subsequent properties purchased with the same workload attached.
My questions are:
How do we set this partnership up? i.e. do we need a lawyer, can we just write it down and consider it a partnership? Can one person hold everything in their name and the rest of us just split the profits or should we all three be listed on the title and deed? If we all are does this then mean we all are part of the mortgage process when it is time to take one out? Could the mortgage be held by one of us so as to not effect everyone else's debt to income ratio?
What are the tax implications for this? Specifically, once the partnership is formed do we just treat this like any other rental income or are there special regulations?
What happens to this partnership if and when my mother dies?
Does anyone have any boilerplate templates or common issues that we should address in the terms of the partnership?
****Disclaimer: I hate to be this guy, but please do not give me advice on getting into business with my family, critiquing the investment strategy, how best to cook my lentils or any other tangential topic you might deem worthy.