how to get partnership started??

im trying to start a investment group for the goal of purchasing real estate…i was thinkin about a llc, but the process seems too complicated…i just want to have an account where the members in our investment group can make monthly contributions, and when we have enough money in our account, go purchase real estate.

what are the steps into making a partnership legit?

thx ahead of time

What you are doing is a joint venture.

Hi Ljdub!

I agree that it is a joint venture. I would also advise the you look a little deeper into what you are trying to accomplish. There is a lot more to it especially when you are creating an operating agreement. Your desire is a good one…the problem is there are a lot of legal issues and a lot of business issues that you will want to address.

Pooling money is an ideal approach…but the devil is in the details. A book can be written about partnerships, joint ventures, raising capital, etc (actually…there are a lot out there). There is a right way to do it but unfortunately it takes time, education and professional assistance to do it right.

Joint ventures and partnerships are like kids…easy to have…hard to raise right.

you’re going to have trouble purchasing real estate with this set-up unless one (or more) of the partners are willing and able to step up to a personal guarantee. The bank just isn’t going to loan $$$ to 10 guys who are putting in $100 a month.

If these were for flips, you’d usually set up as Jvs for specific ventures. You’d start a limited partnership with maybe an LLC as the operating manager. Some of my investors give the personal guarantee on the note, which is comfortable for the limited partners.

Another option is just to have the investors loan you the money on a real estate backed note. They can just be silent money partners with you offering a 10-12% return. This way, it’s more simple and you know exactly how much profit to hand over. We use this model for spec builds, new construction, rehabs , and flips.

If you’re trying to do long-term holds, you’re getting into REITs and syndicates, which usually require a lot of experience on your behalf if you’re putting this together.