How would I legally organize a group of four people to buy an four unit apartment complex with minimum risk.

We've found a quad-plex for 1MM and want to safely split it four ways, 250K each.


Purchase the building as a corporation. Each of you owning 25% of the corp. I would also suggest detailing the business agreement within the corporation. Seek the advise of a lawyer to do this properly.

Answered 10 years ago

There are many different ways to do this and if the 4 partners are of similar networth then I imagine all their accountants will have a similar ownership vehicle in mind. Also depends which country you are. Be careful giving any 1 partner too much power as I have seen that backfire often. Step one work with the accountants, step 2 work with 1 lawyer taking feedback from partners and accountants, step 3 each partner should have their own lawyers go over the structure to make sure one power can't borrow against the property in the future without certain checks & balances etc...

Answered 10 years ago

You may want to organize as a legal business entity. You will, at the least, want to have a partnership agreement drafted. This is a difficult one to give a blanket answer on as more would need to be known about the parties and their objectives. I would highly recommend consulting an attorney before proceeding.

Answered 10 years ago

This is not legal or tax advice. Talk to a lawyer from your jurisdiction

Your question is how can we own property with minimal risk:

Particularly in the USA, there is a great deal of liability involved with ownership of rental property.

One needs to consider inside out and outside in asset protection.

Inside out - being liabilities arising from within the legal entity that could
Outside in - liabilities arising personally, whereby the legal entity is "up for grabs" in court

I would have each person own thier share in the apartment legal entity with another legal entity.

Owner Alfred has an LLC holding co
Owner Brad has an LLC holding Co
Owner Charles has an LLC holding Co
Owner Dick has a trust

Alfred Holding LLC: 25% of Apartment complex Corp
Brad Holding LLC: 25% of Apartment complex Corp
Charles Holding LLC: 25% of Apartment complex Corp
Dick Holding Trust: 25% of Apartment complex Corp

This way you get both outside in and inside out asset protection, and each person can transfer thier assets without having any difficulty. Also can pass on to heirs much easier, and gives added flexibility for each owner. It also provides a "double layer" of asset protection because of the holding company for each individual.

As a bonus, you could register your LLC in a state that doesn't require names to be registered on state docket, so your name won't appear in a simple asset search from an overzealous creditor.

To read more, check out these websites:

Answered 10 years ago

We have helped over 500 property investors address this question. The typical format is to form an LLC, distribute shares based on up front investment, purchase a BEEFY insurance policy for the property including umbrella insurance. The limit you purchase should be at least as high as the property values and shouldn't cost much.

Make sure you work with a good attorney to set it up, and that there are remedies to discuss what would happen to the shares or what obligations shareholders would have if the property required further investment, maintenance costs, etc.

If your concerned about the financial risks, there are no bulletproof ways to address that in the scenario you are considering. You could do a lot of up front research to verify rent to vacancy ratios, property values in the area, and how sound each of your partners are to help reduce the risk.
Good luck.

Answered 9 years ago

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