Partnerships for out of state STRs

[Richie Frost]

Hi, does anyone here have experience with partnerships on STRs? Especially where partners and/or properties are out of state.

My parents (in Utah) want to get some passive income and would like to partner with my wife and I (in Washington state) on an STR. We just bought our second cabin in Sevierville, TN and were thinking of using it for this partnership.

Our plan was to have my parents pay us back for the initial capital used and, in exchange, split the profits. I was thinking of making it like an RELP, where my wife and I act as the general partner and my parents act as the limited partner.

Would you recommend hiring an attorney for this? Did your LP need to be an accredited investor?

[Daniel Hyman]

@Richie Frost

This is an area where it would be helpful to consult with a CPA and an attorney prior to deciding about if and when to set up an entity. Our firm unfortunately spends too much time assisting clients who have: 

a) formed an entity when it was unnecessary 

b) formed the wrong entity

c) formed no entity when they should have