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Message
Best business structure for a joint commercial real estate venture
Posted on 8/15/25 at 9:22 pm
Posted on 8/15/25 at 9:22 pm
Me and 2 buddies going in 3 ways on a commercial building with a locked in NNN tenant for the next few years. We will be splitting down payment and expenses/profits equally 3 ways. My initial thought is to buy the property with LLC that each of us own 33.3, but curious if money talk had any ideas.
Disclaimer: I know the numerous ways this can go south. Never go into business with friends etc
Disclaimer: I know the numerous ways this can go south. Never go into business with friends etc
8
Posted on 8/15/25 at 9:40 pm to Sir Saint
I’d probably spend the money to talk to real estate attorney and get professional advice rather than just relying on the money board if I was to be honest.
Posted on 8/15/25 at 9:49 pm to GeauxTigers123
quote:
I’d probably spend the money to talk to real estate attorney and get professional advice rather than just relying on the money board if I was to be honest.
Posted on 8/15/25 at 10:34 pm to Sir Saint
Partnership, LLC (all contribute equal amounts, simplest way), no on S Corp because of it being real estate
Fairly simple from there
Fairly simple from there
Posted on 8/16/25 at 12:41 am to GeauxTigers123
quote:
I’d probably spend the money to talk to real estate attorney and get professional advice rather than just relying on the money board if I was to be honest.
I get this being the knee jerk advice but I don’t think this is that complicated. You know, if you don’t have input you could just not respond
Posted on 8/16/25 at 12:42 am to DraggingPride
quote:
Partnership, LLC (all contribute equal amounts, simplest way), no on S Corp because of it being real estate
Love it
Posted on 8/16/25 at 7:02 am to Sir Saint
If you are buddies, the most important thing to do is agree ahead of time on how someone can get out. Spell it out very clearly. Chances are one will need or want out, and it’s much better to have a plan ahead of time if you want to stay buddies.
Posted on 8/16/25 at 2:08 pm to Sir Saint
Let me put it another way. I think doing business with friends that can get ugly in a hurry so I’d want it to be clear on what the arrangements are and I’d probably consult an attorney to get it straightened out on the front end.
But thanks for the down vote.
But thanks for the down vote.
Posted on 8/17/25 at 8:12 am to GeauxTigers123
You really don’t want to go into a meeting with an attorney uneducated though. It helps to have explored some options on your own, and yes I’m sure a lawyer will come in and say there’s nothing worse than someone with bad internet advice. But generally speaking there’s options for most contracts, so having some of those options discussed before a meeting helps to make things faster.
Everyone loves to suggest that ‘go see a professional’ works perfectly every time. It doesn’t, at all.
Everyone loves to suggest that ‘go see a professional’ works perfectly every time. It doesn’t, at all.
Posted on 8/17/25 at 1:41 pm to Sir Saint
I am in one and we did equal partnership in an LLC. Each put up equal amount of cash for downpayment. Now that said we are at year two and haven’t drawn any profits out of it due to building repairs etc.
Posted on 8/17/25 at 3:14 pm to baldona
quote:
Everyone loves to suggest that ‘go see a professional’ works perfectly every time. It doesn’t, at all.
Yeah screw getting a professional opinion when potentially hundreds of thousands of dollars on the line.
Op, go with what you feel on this one. Baldona thinks the couple hundred dollars will be wasted.
Posted on 8/17/25 at 3:37 pm to GeauxTigers123
Get a reputable professional to do your organizational documents and provide advice. Pay now or pay later…it’s cheaper now.
Posted on 8/17/25 at 5:07 pm to baldona
quote:
You really don’t want to go into a meeting with an attorney uneducated though. I
That’s a different question though. If that was the case, OP should say something like “I have a meeting coming up with an attorney. What should I ask?”
Posted on 8/17/25 at 5:28 pm to GeauxTigers123
30 year banker - LLC is easier (it’s not a partnership fyi as that’s only two people)
Don’t just think about the profits. You need to dial in on that rainy day too:
- Capital calls. If, when, where etc. if one partner can’t cough up more dough at that time, need to speak how ownership dilution of that member works
- death of member. Need to speak to this unless you want to be in business with the partners family/wife etc if they croak.
Really need to dial in these and other stuff that doesn’t appear to be a big deal going in but can be very painful if something happens.
Don’t just think about the profits. You need to dial in on that rainy day too:
- Capital calls. If, when, where etc. if one partner can’t cough up more dough at that time, need to speak how ownership dilution of that member works
- death of member. Need to speak to this unless you want to be in business with the partners family/wife etc if they croak.
Really need to dial in these and other stuff that doesn’t appear to be a big deal going in but can be very painful if something happens.
Posted on 8/17/25 at 7:14 pm to Im4datigers
quote:
it’s not a partnership fyi as that’s only two people)
What? A partnership is 2 or more entities, persons and/or businesses.
If the venture is an LLC with more than 1 member, they will file a 1065 partnership return unless they make an s corp election. Which they shouldn’t as it’s a real estate venture.
This post was edited on 8/17/25 at 7:15 pm
Posted on 8/17/25 at 7:19 pm to baldona
quote:
If you are buddies, the most important thing to do is agree ahead of time on how someone can get out. Spell it out very clearly. Chances are one will need or want out, and it’s much better to have a plan ahead of time if you want to stay buddies.
On the flip side, be sure you understand how you can get kicked out, too.
Posted on 8/17/25 at 7:26 pm to horsesandbulls
quote:
What? A partnership is 2 or more entities, persons and/or businesses.
If the venture is an LLC with more than 1 member, they will file a 1065 partnership return unless they make an s corp election. Which they shouldn’t as it’s a real estate venture.
People are talking about this from different angles, but you bring up a good point. When I used to dabble in this, when I'd have a consult 90%+ of the questions were tax related, and I'd always tell them they needed to speak with a CPA...so OP needs to do that, too. A banker may be a wise investment of some time, too.
Posted on 8/18/25 at 10:01 am to GeauxTigers123
quote:
Let me put it another way. I think doing business with friends that can get ugly in a hurry so I’d want it to be clear on what the arrangements are and I’d probably consult an attorney to get it straightened out on the front end.
I'm living this nightmare at the moment. Started to make a post on here several times about the lessons I've learned, but back out because I now feel like a complete idiot for not listening to the well spoken advice about not starting businesses with friends (or anyone for that matter). This experience has left such a sour taste in my mouth that I'll never go into a partnership again even if it has all the upside in the world. I'm working 7 days a week in the sun right now just to wrap up these remaining jobs because my partner has come up useless. This is on top of my day job as a software developer. I'm beyond burnt out, and my partner sits at his house, jobless, every day not making any progress or contributing and he's clueless as to why I'm aggravated all the time.
My experience is you're one of the two in the business. Person one has the drive, know how, vision, work ethic and capability, while the other person is just lazy and doesn't have the level of responsibility or care for quality to devote to the job. If you're the first person, even a hard working but can't quite keep up partner will seem like the latter. Someone said to create and hold each party to expectations, but once the business is formed, there's a limited number of options that all end badly to do something about that.
Partnerships can and do work, but this one has had me working my normal 8 to 10 hour job and then going out during the heat of the day for an additional 3 or 4 hours, then 8 hours on Saturday and Sunday or more. I hope the best for the OP and I write all this knowing I'm in the worst case scenarios as far as business partners. Hopefully it goes different for the OP.
Fortunately, I didn't front the company more money than I could afford to lose and at this point, I'm ahead of where I started. Just lost a bunch of time, sleep and energy at this point.
Posted on 8/18/25 at 10:06 am to Sir Saint
quote:
but I don’t think this is that complicated.
Sounds like you got it figured out then
Posted on 8/18/25 at 10:14 am to Sir Saint
quote:soccer board
Me and 2 buddies going in 3 ways
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