By: quercus
Yes-you can do this-but take what I say with a grain of salt b/c I don't know the laws of Washington.

#1: Don't think of this as a business-this is more like a marriage. You're thinking prenup if relationships go south, not profit splitting when you all get rich.

A limited liability company is probably your best vehicle. They are commonly used to buy and flip houses. The LLC owns the house. The members of the LLC (analogous to shareholders but NOT the same) own the LLC.

The bank-you just need to find the right loan officer. The LLC will borrow the money and all you guys (the members of the LLC) will probably have to sign personal guarantees. Count on 20% down

You "need" a transactional attorney. Not so much for setting it up, but for talking about ways to plan if things go south. As long as everything is humming along, you could use forms you downloaded off the internet to get up and running.

What to do if someone wants out 3 years down the road is your biggest planning issue-how will you buy the person out, etc? That's what so key to plan out now.

Everyone getting their own lawyer is a very wise idea, but so is a weekly prostrate exam. It might well be overkill just to buy one house. One attorney or even CPA you trust who advises everyone to go get their own attorney, has you waive conflicts, and then just explains things to everybody at once would probably do the trick. Your call.

Ask the CPA re: taxes. The LLC won't pay taxes itself, just file an informational return (form 1065). All income/loss passes through to the members. The LLC can deduct the mortgage interest and that will be passed on you.
 
By: quercus
Yes-you can do this-but take what I say with a grain of salt b/c I don't know the laws of Washington.

#1: Don't think of this as a business-this is more like a marriage. You're thinking prenup if relationships go south, not profit splitting when you all get rich.

A limited liability company is probably your best vehicle. They are commonly used to buy and flip houses. The LLC owns the house. The members of the LLC (analogous to shareholders but NOT the same) own the LLC.

The bank-you just need to find the right loan officer. The LLC will borrow the money and all you guys (the members of the LLC) will probably have to sign personal guarantees. Count on 20% down

You "need" a transactional attorney. Not so much for setting it up, but for talking about ways to plan if things go south. As long as everything is humming along, you could use forms you downloaded off the internet to get up and running.

What to do if someone wants out 3 years down the road is your biggest planning issue-how will you buy the person out, etc? That's what so key to plan out now.

Everyone getting their own lawyer is a very wise idea, but so is a weekly prostrate exam. It might well be overkill just to buy one house. One attorney or even CPA you trust who advises everyone to go get their own attorney, has you waive conflicts, and then just explains things to everybody at once would probably do the trick. Your call.

Ask the CPA re: taxes. The LLC won't pay taxes itself, just file an informational return (form 1065). All income/loss passes through to the members. The LLC can deduct the mortgage interest and that will be passed on you.
 
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