Financing And Protecting Self In This Deal
ok here is the situation a friend of mine bought a lot (held in an LLC owed by my friend), he paid about half down and the seller hold a note for the rest but will subordinate to the bank construction loan where I come in, I will finance the construction of the house through a construction loan from the bank (and he will build it, he is a builder). After its built and sold we take out what we both but in it and split the profit 50/50. The question is how do you structure this, for sure I need to be added to the deed of the lot, I cannot but money in something I don’t have rights to, should I have my own LLC with its bank account so I would write the construction payroll from, salary to workers, or would that be part of the construction loan draws? I am sure there are a lot of things I am missing, help be appreciated thanks. By the way the LLC that own the lot its him my friend and his son who is been abroad for a while, would he have to sign or agree to sell the property when time comes to sell, ,could he be an obstacle and say I don’t want to sell if he really have to sigh to agree to selling the property, because I will be a separate entity or an LLC (I am going to file for today by mail) to protect myself at least that’s what I am thinking
Chris covered this well in his response. Bottom line, your friend can contribute the property to the new LLC and you would contribute cash (to pay the construction loan interest). How you split up the deductions is goverened by the operating agreement.....if you want the interest expenses allocated 100% to you, have that written into the operating agreement of the new or existing LLC.