Co-buying investment property: Is LLC necessary?

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Hi All!

I am buying an Airbnb investment property with a friend in a State neither of us live in. We are placing 50-50 capital and will be 50-50 split in profits and losses. I will be 100% the decision making partner of the two with my friend being completely passive. Will be spelled out in Operating Agreement.

I am planning to run this by an attorney but wanted to get some advice from some of the experienced people on here first.

Do I need to form an LLC or just spelling everything out in an Operating Agreement will suffice? The property is a SFH so bank will not allow it to be held under an LLC and will go under both of our names. Operating agreement will be setup TIC. In this scenario, is formation of an LLC necessary? (besides the liability protection benefit- which is big. But putting that aside). Is it absolutely necessary for tax purposes etc? Any input appreciated before I get attorneys and accountants involved.

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I would be careful about listening to anyone suggesting an LLC because people selling them have their own agenda.

An LLC would be to protect you to alleviate you from being personally liable should your venture go bankrupt or get sued by someone who gets drunk and falls out a window. But, as for the partnership, an LLC will not make your partnership iron-clad.

I am 100% against partnerships and Airbnb's have a whole sleuth if inherited problems. Add to that, you won't have hands-on day-to-day control I will bet your venture goes bust very quickly. If you did one locally, maybe you would have a chance.

You say you will have 100% control? I guess that means you will also take 100% of the blame for everything that goes wrong and that is too much responsibility for me when having to think about my partner.