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re: Best business structure for a joint commercial real estate venture
Posted on 8/18/25 at 11:40 am to baldona
Posted on 8/18/25 at 11:40 am 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.
this is great advice, thank you
0
Posted on 8/18/25 at 11:57 am to horsesandbulls
quote:
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.
Where did I say this? I would 100% recommend seeing an attorney and follow their advice. I simply said to educate yourself on your own before and after the meeting, additionally.
ETA: also lol if you think this is ‘a couple hundred dollars”
This post was edited on 8/18/25 at 11:58 am
Posted on 8/18/25 at 12:01 pm to Sir Saint
Also, don’t pay for anything and don’t let anyone else pay for anything without keeping receipts.
Before you do ANYTHING, start an LLC and open a business account. Everyone needs to put in the same amount. Pay for 100% of things out of this account. 100%.
Many many business deals have blown up because one person fronted the money and expected reimbursement in ownership % change. If you agree to be 1/3, 1/3, 1/3 but one person puts in 90% of the money to start that can create a mess.
Before you do ANYTHING, start an LLC and open a business account. Everyone needs to put in the same amount. Pay for 100% of things out of this account. 100%.
Many many business deals have blown up because one person fronted the money and expected reimbursement in ownership % change. If you agree to be 1/3, 1/3, 1/3 but one person puts in 90% of the money to start that can create a mess.
This post was edited on 8/18/25 at 12:02 pm
Posted on 8/18/25 at 12:10 pm to baldona
quote:
Before you do ANYTHING, start an LLC and open a business account. Everyone needs to put in the same amount.
Absolutely not
Posted on 8/18/25 at 1:02 pm to Mingo Was His NameO
quote:
Sounds like you got it figured out then
I'm not trying to become a legal expert in real estate and business law. We will have legal involved at some point but we haven't even made an offer on a property yet ffs. This thread has accomplished the goal - I got great advice from some baws who have personal experience with these types of deals. I'm not the brightest but I think that's kinda the point of starting threads on a message board
Posted on 8/18/25 at 7:14 pm to Sir Saint
Partnership LLC…that’s what we were advised on for our commercial real estate properties. Real estate is tax advantaged and partnerships give more optionality than s corps.
Posted on 8/19/25 at 5:46 am to Sir Saint
A smart chimp can "set up an LLC" by filing articles of organization, but professional advice is worth it to prepare a detailed operating agreement that provides for ways to resolve matters such as death, divorce, or bankruptcy of a member; tiebreaker mechanisms; capital calls if more money is needed; what happens if a member fails to make a capital call; buyout provisions in the event of disagreement; dissolution; etc.
A business attorney who has seen things go south various ways can draft an operating agreement that provides for how things will be handled in those events, and can provide provisions specific to the property that will be acquired.
People usually go into these things thinking it will be successful and profitable. They don't like to think about all the shitty things that can happen, but a good attorney will help them anticipate those and provide a workable resolution in the OA if one happens. For example, you might not want Bob's bitchy wife becoming a fellow member in your LLC after his death or divorce. Plan for it.
A business attorney who has seen things go south various ways can draft an operating agreement that provides for how things will be handled in those events, and can provide provisions specific to the property that will be acquired.
People usually go into these things thinking it will be successful and profitable. They don't like to think about all the shitty things that can happen, but a good attorney will help them anticipate those and provide a workable resolution in the OA if one happens. For example, you might not want Bob's bitchy wife becoming a fellow member in your LLC after his death or divorce. Plan for it.
Posted on 8/22/25 at 7:55 pm to DraggingPride
This is how we setup our real estate partnership. 50/50 on all fronts.
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