Building portfolio of Texas properties with investment partners

[Michael Yeung]

Hi, sorry for a bunch of newbie questions, but wanted to tap into the collective wisdom here.  I'm looking to build a portfolio of rental properties in the Dallas and Houston areas, working with a couple investment partners.  I have several rental properties already under my own name, but am new to the process of doing this in partnership with others, and new to doing this in Texas.  A few questions:

1) We'd like this portfolio to eventually reach 10+ properties.  To confirm, I think I want a small business or commercial loan for this, correct?

2) We want all of this classified as passive income (and will for instance have a property manager), so I believe would want this classified as an LLC, with the investors listed as the owners. In which state should we incorporate? The investors in this case live in NJ and NY.

3) Are there any big gotchas of which we should be aware as we go through this?

Thanks in advance,
Mike

[Rod Hanks]

Hey Mike, you need to talk to a Texas real estate attorney. With a partnership, you want to set it up correctly from the start because it can be very expensive to back track after the fact.