Investing with my parents: Loans, Deeds, and Entity Questions

[Andy Winningham]

Hey BP Community,

First, I've searched around other forums for some specific answers to my questions and didn't find any. Forgive me if these have already been covered elsewhere, and if so, just direct me to where I need to look. Otherwise, I'd love to hear some wisdom here!

Situation

My wife and I are on the brink of purchasing our first rental (will either happen or not happen sometime over the next few days). The property we're looking at is in our neighborhood in Dallas, TX. For this first deal, we are planning on going in on it with my parents. My dad wants to encourage my interest in investing in real estate (wishes he would have gotten into it himself) and wants to: a). help me and my wife get started, and b). invest alongside us. The plan is for he and my mom to provide the down payment (will be around $50k), for my wife and I to manage the property, and we will split all future income 50/50. 

In the future, my wife and I are interested in buying more rentals to own solely for ourselves. Additionally, we'd be interested in continuing to go in on more properties in the future along with my Dad. 

All that said, here are my questions...

1. What names should we (or are required) to put on the loan document? And what names should we (or are required) to put on the title? And can those be different from one another? We figure that both my wife and I as well as my parents will all have to have our names on the loan documents, since they are guaranteeing the loan and providing the down payment. If possible, my Dad would like for our names only to be on the title for the house. Is that recommended? Is that even allowable? He has far more assets to protect than we do and he would like to give himself liability protection. Would doing this accomplish that goal? Would love to hear any thoughts on this. 

2. What is the ideal entity structure for us? Should we even form any kind of entity? Given our situation for this first deal (that my wife and I are partnering with my parents), I am unclear about how that works when forming an entity. But given that it's important to my Dad to have protection from liability, it seems like it would be a good idea to do so (btw, he already has a large umbrella policy). And given that we are open to the possibility of more deals in the future, it also seems like it might make sense to form an entity. Also, my parents live in CA, my wife and I live in TX. This first property is in TX and most likely future properties would also be in TX. 

Would love to hear from the wizards on this. Thanks y'all.