Purchasing property with friends for personal use and rental
Hi everyone,
First time poster here. I work as an attorney (in a field unrelated to real estate, unfortunately) and plan to purchase property in the coming months with two long-time friends, one who manages his parents' residential and commercial properties and the other who works in the IT space. Specifically, we plan to buy property in a secluded area (e.g., near Shenandoah National Park or in WV near the VA/MD border) that would serve two purposes: (1) a peaceful retreat from city life, and (2) a rental property for short-term stays/experiences (e.g., something we could list on Airbnb).
One takeaway from searching these forums is that we should, from the outset, have a detailed agreement in place to spell out the rights and responsibilities for everyone, such as decision-making authority, managing membership/ownership interests, etc. This makes sense. Aside from this, one thing I am unsure of is to what extent it would be beneficial to establish a corporate structure from the outset. For example, does it make sense to create a partnership or LLC, or is it sufficient to own the property as tenants-in-common and execute a joint venture agreement that governs our operations? Any thoughts or resources that folks can share on this question would be much appreciated.
We are looking at properties in the $200 ~ $250K range and plan to take out a mortgage with about 30 to 40% down, so that we leave sufficient cash for renovations and other expenses. One complicating factor is that we all plan to contribute different percentages of the down payment; we are thinking through how to account for that in the agreement (for example, the person contributing the least upfront may take on a greater share of the mortgage payments for a period of time, etc.).