Pull Money via HELCO / Partnership Structure / LLC Financing

[Jake Durrett]

Hi All - my wife and I are long time BiggerPockets podcast listeners and are getting ready to take our next step in investing. Here's our situation:

1. We own a very profitable vacation home (that we love and want to keep) that we purchased in 2016, renovated, and currently Airbnb. We worked and searched for a deal in a very hot market and were lucky enough to purchase a property at 90k. At the time of purchase, it was appraised for 125k. We put about 15k into the place (new kitchen, new flooring, landscaping, paint, windows, etc), including furnishing and adding a hot tub for the Airbnb listing. The market in our area is booming, and now current sites like Redfin and Zillow have our property estimated at 191-195k - without knowledge or record of our renovations, so by conservative estimates and looking at comps in the area, we believe it would easily appraise for at least 200k. 

2. We had so much fun with our first property, and love being Airbnb hosts, however, we want to take the next step and scale up our investments. We have good friends that we'd like to work with (who helped us work on our first place) that we want to invest with and help them get into the game. We have good knowledge of the Grand Rapids, Michigan area (we're all from Michigan) and are thinking it would be a good place to do our first flip.

3. With the equity we have in our Airbnb, my wife and I would be financing the purchase, while our friends (who have flexible work schedules) will execute much of the on the ground needs. By my rough estimates and talking with my credit union, it looks like I could pull out about 76k if the property does indeed appraise for 200k. 

So the question is, how should we structure this? I've read time and time again on the forums that forming an LLC too early is a waste of time and money, but in this situation, I'm thinking it might be smart. My idea is we pull out the 76k, form an LLC with our friends, loan the 76k to the LLC, and then have the LLC make the purchase of the property. Any thoughts or advice from those out there that have done this before? I should also mention that our hope is we buy an property in cash with the LLC - but in the event we need to secure funding - how does this work if the LLC doesn't have an financial records or equity of it's own?

After the reno, the LLC would make the sale, pay back the loan, and then pay us (both my wife and I and our friends) out a fair wage for our time and effort. Or, we would try to do a 1031 exchange and keep building up.

What am I missing here? I know this needs a good CPA and proper structure, but would love to hear others thoughts and advice.