My brother-in-law is a general contractor and has asked me if I would be interested in putting up money to begin flipping houses in St. Petersburg, FL. I have been trying to find ready-made documents for covering my butt in this possible endeavor. Can anyone direct me to a website where I might find documents to set up a trust for this venture?
Hi,
I recommend you create a Limited Liability Company (LLC) as a two party ownership with your brother in law. This allows you to pass through write offs and profits to your personal tax returns while protecting you and your brother in law from liabilities. Your brother in laws construction business will be under contract with your LLC.
You make sure your brother in law has liability insurance, workers comp, auto liability and you may want to have liability insurance / umbrella liability insurance and possible get a builders risk policy for individual projects for your LLC.
Make sure the LLC is at least owned by two parties as it offers the most protection as single entity LLC’s are pretty much not worth the paper there written on as it’s easy to break the corporate veil of a single entity LLC.
Make sure you have a contract between the LLC and his construction company that includes terms and conditions, payment structure, scope of work and a schedule to protect the two of you as owners from the construction liabilities!
GR
I like the idea of using a trust rather than an LLC for many reasons. Main reason is that using an LLC will subject you to one additional exposure each year to ‘uncle’ with the requirement of another tax return specific to the LLC.
Personally, I purchased from John Lydic, his land trust partnership documents, which I’ve used successfully with many partners in transactions…here is his link: https://johnlydic.wordpress.com/
These documents are professional and will accomplish any partnership goals for real estate investing, as you can edit the trust res and make it work for your particular needs.
Hope this helps.
Rob
Hi Rob,
Thanks for the information regarding the trust documents. I used the link you sent me and was unable to navigate to any documents or even any place to purchase documents. Thanks again for your time.
Phillip
Actually, I spoke with John Lydic on the telephone yesterday and he told me that he took down that sight and is spending his time developing his real estate classified business. He did say it was okay to share, and no longer proprietary, so if you send me a private email address and contact information, I’ll attach a sample.
Rob