Family/Partnership agreements

Any guidance on these? Here is my specific scenario:

I have just started, and was planning on doing everything pretty much on my own. Well, my wife was talking to her Uncle and Aunt, and they suggested that they would like to get involved in investing as well, and asked her if I would want to partner on deals.

My opinion is that if I can increase my own income by working with them, then I would do that. They are good people, and I trust them.

Now the questions. If I want to keep the transactions I do with them separate from my own business, do I just set up a second LLC and apply for financing with them?

The thing I was considering, but don’t know if it would work, is just set it up to where they are lending me down payment and closing cost money when needed, and they I manage the properties and give them 50% ownership equity and a monthly payment to cover the loan.

If anybody has worked similar deals or has advice on this, I would love to hear it.


Chad, you have lots of options and you have to know your lender. Do they just want to collect interest and have security interest in the property or do they want ownership?

If they are loaning you DP an closing costs they should not get 50% of the profits. It doens’t wuite work that way. They are already getting interest. It would be like double dipping.

Here’s how I did few deals.

  1. I borrowed DP and CC and gave a generous interest rate for a short term loan in exchange for s 2nd mortgage on the property. I paid back the loan, end of deal. My property, my profit.

  2. A partner bought a condo with me 50/50. THEN he loaned me my half of the money. We split the priofit and I use part of my half of the monthly income to pay the mortgage I owe him. The loan (mortgage) is separate from the ownership. If I had my own money I would have paid in half and we would just be 50/50 partners.

Two separate deals. If I got another laon and paid him back in full, he would still be my 50/50 partner.

  1. As far as your llc. That business instrument would only shield you from liability. They would have to form their own llc for their half of the property. (You may want to check on this.) Then you would transfer your half of the property to your llc.

My recommendation. OPM Other people’s money. Talk them into being just lenders and pay them a generous interest rate while you retain ownership. They don’t have to worry about llc’s, liability insurance, etc. and they get a monthly income.

Once my lenders see the checks coming in on time and regularly, I have had no trouble extending the short term loans. Saves a lot on refinancing costs.

OPM, that’s my advice.

Hope this helps


My advice is simple, NEVER DO INVESTMENTS/SPECULATIONS WITH FAMILY! If it goes downhill, you all will end up hating/blaming each other for rest of your lives!

Dont discourage the guy. If everyone knows the risks up front… that they could lose their entire investment… then if they want to play the blame game that’s their character defect.

I had a lawer/accountant brother who was partnering with me on some deals. In the beginning he asked a million questions and drove me crazy. It was annoying but it was cheaper than hard money lenders. Now after two deals, I made us some moeny. Now he justs asks how much I want and where to send the check. See, we built up some trust and experience.

It’s not all bad


Dan- Thanks for the advice, I know it can be risky, but these are small deals. If something went completely south on a couple of these deals, the uncle and aunt would be out $10000. They wouldn’t starve if that happened. In fact, they wouldn’t miss a beat. I don’t worry about that with these particular people. I certainly have many relatives that I would not begin to consider any kind of business arrangement with, so I know what you are saying.

Jeff- Appreciate the pointers! I think I’m leaning towards your option #1, but I need to see what their expectations are. I will only do it if I think we can both achieve our objectives.

As always, thanks for the responses! This forum is by far the best I’ve found for this type of exchange.