Two friends pooling money to buy investment lakefront lot - LLC? general partnership? Pros/Cons?

Question

When we sell 3 years from now for a big profit (wishful thinking), does one form of ownership benefit the others? What is cheapest way to get the partnership formed? thanks a bunch in advance

Answer 1

The cheapest way to do this is just buy the property in both names. Nothing is spelled out, so it is assumed that the purchase and the proceeds are split 50/50. However, you can work out whatever you want.

Depending on how big of a purchase this is, it may not be the smartest way to do this. The bigger the purchase gets, the wiser it would be to have a legal contract drawn up, and at least do this as a limited liability partnership.

Answer 2

One bit of advice, make sure, if you are married to consider that.  We owned property with someone else and when their marriage went to the dogs.  The property was in jeopardy.

Answer 3

Just buy it in your names.  Unless it is $4Million dollars you don't need to worry.  No LLC .  No partnership.

Answer 4

An LLC will give you better protection than a General Partnership.  In a GP, if the other partner gets sued personally for something that has nothing to do with your investment, or divorced, they can come after the property you own together.

You should talk to a lawyer and even a tax accountant to discuss your specific situation though.

Go on your State Corporations website (do a Google search) to see what you need to do.  It's usually some simple forms.  You can also use a web service like legalzoom or the like, and they will do everything for you for a fee.

Good luck.