Advice on investing with family member

[Kevin George]

Hi BiggerPockets!

My wife and I are considering investing in a multi-family property with her brother, Mason, and his wife in the greater NY area. Mason and his wife already rent out one unit in the home they live in and are interested in locally property managing a second. The advantages here are that we know the area very well and we save on the management fee which is huge.

On the other side, I'm sure many of these types of 'bright ideas' get in the middle of personal relationships. We share a lot of trust and I'm confident we will be good partners but we should also be practical and consider what would happen if one of us needed to cash out, if one of us got divorced, etc.

More experienced investors - do you always handle this through an LLC? What type of structure or controls do you put in place?

Appreciate your advice