Posted by dealmaker on September 02, 2005 at 12:12:14:
Make doggone sure that you and the friend are in 100% agreement about how things are to be run BEFORE you do anything. Read some books on partnerships, like in the “for dummies” series, etc, before moving forward.
I’d form an LLC, dont’ use the words “real estate”, “investment”, or property in the llc name.
have a seperate checking account just for that property. Every penny of income, every penny of expense comes and goes through that account ONLY.
Make sure you decide in advance how much “cushion” has to be in that account before there will be any distribution to the two of you.
Make sure you decide in advance what kind of “buy/sell” agreement, and how the buy/sell price will be calculated.
I’ve been in deals with family and friends before. Only the non real estate one ended on a “bad” note. Of the rei ones two were very good, on the third one I did a lot of tongue biting for three years before we liquidated. Can’t say it ended badly but haven’t talked to the former partner since the final liquidation check was cashed.
dealmaker