Buying investment properties with partners

[John Golding]

Hi all, I'm looking into buying a first investment rental property with 2 partners and we're trying to figure out a) what legal entity (if any) to create and b) how to handle financing. 2 partners are in California; 1 partner and the property we're purchasing are in Montana. The plan was to create a Montana LLC, purchase the property with the LLC, and run the investment as a business as a way to keep things organized in a single entity that the 3 of us have equal ownership of. Any guidance would be greatly appreciated. The specific questions I had were:

1. Does an LLC make the most sense for us? If not, what's the alternative? We're already aware of and plan on purchasing umbrella insurance to protect our personal assets.
2. Does the fact that 2 of us are in CA mean that we'll incur CA's huge ($800) LLC tax? That, plus the cost of an accountant each year could put a significant dent in our income.
3. What kind of loan should we get? Should the MT partner try to get a personal mortgage in their name? Does a commercial loan make more sense?