My wife and I own an investment property in Florida, that is held in our names and currently rented to a tenant under a one year lease. We have established an LLC with a friend of ours with plans that my wife and I will own 75% of the LLC, while our friend will own 25%. Our plan is the following:
- Quit Claim title to LLC, while leaving the mortgage in our personal names.
- The LLC will sign an agreement with my wife and I to make monthly payments for debt service and retire the debt upon sale or transfer of the property.
- Our friend who will own 25% of the LLC will reimburse us for 25% of all costs incurred to date, and will assume his portion of the debt via the agreement between the LLC and my wife and I.
- All agreements, insurance, etc will be changed to the LLC, with just the mortgage note remaining in our personal names. We are comfortable with the fact that the LLC won’t default on the monthly payments to us.
So, we really want to sell 25% of this property to our friend, and we need to establish an LLC for all of the obvious reasons. Does anyone see anything blatantly crazy with the plan listed above? Am I missing any steps? Thanks for any advice.