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  1. #1
    Join Date
    Oct 2015

    Default How to Help Your Child Invest in the Family Business

    My question involves real estate located in the State of: KANSAS We (wife & I) have a small rental property business in a small college town. Our single daughter, who lives in NYC, wants to invest in our business. How can this be achieved, while preserving flexibility for both us and her (e.g., at some point in the future, she may want money out for a down-payment on a home). ..Need help & ideas. --Jaes.

  2. #2
    Join Date
    Mar 2013

    Default Re: How to Help Your Child Invest in the Family Business

    I can think of a few ways, for all of which you and she would be wise to engage an attorney and have a comprehensive contract.

    1 - She can loan you money for use in your business. You put up the property as collateral and write a mortgage where you pay back the loan to her in monthly payments with interest so she has an income. Should have a due on sale clause so she gets the balance paid when you sell the property.

    2 - Form a partnership or LLC with her. Create an operating agreement that provides her with a percentage ownership, based on her investment, and pay her out of the profits. For that to work the property must be owned in the name of the partnership or LLC.

    3 - Deed her a percentage ownership in the property, based on her investment, and pay her a share of the monthly income.

    Any one of the three methods (and there may be some that I haven't thought of) can be structured with an "out" clause where she can get her money back any time she needs it.

  3. #3
    Join Date
    Oct 2015

    Default Re: How to Help Your Child Invest in the Family Business

    "adjusterjack", I very much appreciate the time you have given me with your thoughtful suggestions. And, as per your advice "to engage an attorney", now, I can go to one with ideas in hand. ---Further, I liked your Ayn Rand thought. Thanks much. ---Although adjusterjack may have covered it, additional thoughts are certainly encouraged. ---Jaes.

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