Trying to figure out partnerships/corporations

[Ashley Benning]

I have a sole proprietorship for my REI business. I am looking for my first flip or BRRRR property, in either the Los Angeles area (where I live), Arizona (where I used to own property and where I frequently visit), or Utah (where my sister lives). My sister and her husband would like to partner with me on properties in Utah (where they live).

We're seeking advice on how best to partner. Do they also form their own business entity, and then the two businesses partner on select properties? Or is it better if I convert my sole proprietorship into some other type of entity and then they are partners within that entity?  They are unsure if they will want to be involved in my investments outside of Utah, but I will be involved in any investing they do within Utah. We have different responsibilities: my sister will be the property manager for our Utah rentals; my brother-in-law will do some of the sweat equity for the renovations and will oversee the contractors; I will be the project manager and finances (I'll get us the funding, do the budgets and purchases, and also the design for the renovations).

Or, do we not worry about it until we've done a few properties together? Or do we tackle this now? Either way, we will get our job responsibilties down in writing. 

Thanks for your advice!

[Manolo D.]

@Ashley Benning They can get their own entity, it's cheap maintenance in other states, in CA, it is at least $800/year with FTB for corps or LLC, so for yourself, stay with sole then sign documents with them (entities will not matter). Personal opinion, if you don't have a personal networth of 250k, it's not worth protecting. You can do a two party agreement, them (or their entity) plus you (sole prop). Each property should be treated as a separate agreement, with separate bank accounts, the whole 9 yards. This way when you sell, it's easy to split. You can combine properties in one bank account for less maintenance, but that's always messy.