Credit Partner - How to setup? - Posted by SRN

Posted by sandyjeans on October 27, 2005 at 12:35:28:

I’d like more details on setting up a partnership like this, too.

I have someone with pretty good credit & great income who has committed to investing $150-200K for downpayments/fixup/business expenses/etc and do any qualifying needed on properties in return for a “decent return” on his money. He is tired of watching his IRA & 401 go down in value while the 2 houses he owns are increasing wildly (Phx area). He’d love to reap more of the appreciation here but has absolutely no time to devote to finding/fixing/managing due to 60+ hours/week in his profession. On the other hand, I have time & knowledge but no money & only fair credit. So it’s a good match, but we want to be sure to legally structure this so we both get what we want & still come out friends! LOL! We plan to reinvest the majority of the profits in the business and then dissolve the partnership in 3 years at which point I should have $$ & credit enough to continue on my own.

We set up an LLC already, but from all I’ve been told since then, that’s good for Holds, but tax-wise, Flips are better bought in an S-Corp, so that’s my job today.

I also need to learn how to find Private Investors for loaning 2nds up to 90%LTV–otherwise we’ll run out of capital too fast. Finding properties doesn’t seem to be a problem for me!

Credit Partner - How to setup? - Posted by SRN

Posted by SRN on October 20, 2005 at 08:25:17:

I have a partner that is willing to “loan” me his perfect credit to purchase property (to flip). We are still working on the details so my questions is on how to setup such an arrangement so that it is beneficial to both parties and flexible enough to buy and close quickly.

What needs to be done on the financing to get us ready to make purchases? What type of financing should I look into setting up? Should we look into an open credit line or something similar as opposed to a mortgage? What sort of agreement or contract do we need together? What should I look out for?

I was originally thinking I should setup a new LLC and have both of us as members (me controlling), then have him get appproved with my MB, then use the new LLC and/or assigns for purchases, close with a new mortgage (or flip prior to close), fix, sell, etc. The more I read on the boards, the more options I see.

I’m sure I am missing something. Can someone please give me some advice.

Thanks very much.