Partnering on an Owner-Occupant Deal With No Legal Entity

[Brianna Wickham]

My husband and I want to invest in our first SFR deal with a friend, but we aren't sure the best way to structure our loan (I.E: can our friend just be a cosigner on our loan instead of a co-borrower), or how to write what would essentially be our "partnership agreement." We eventually would like to transfer our property into a formal LLC structure, but aren't ready to form the entity yet.

Facts:

Property Type: SFR 3 bedrooms

Friend/"partner" or co-signer: To provide initial down payment, cover closing fees, etc.

Me/spouse: Provide the deal, live in (owner-occupied), manage the property, find the tenants, rent the extra bedrooms

Profits: Agreed upon split

Financing: Seeking FHA with low down payment or similar option with my husband/me as the borrower, friend as the cosigner and initial down payment provider (to be reimbursed 50% for our share over time)

Questions:

1) If we operate similar to how partners would in a legal partnership, would the appearance of our partnership activity cause us to trigger a legal entity/1065 filing requirement? 

2) We want to create a written "partnership agreement" to document the ownership percentages, P&L split, other necessary info etc., but again don't want to be a legal LLC or general partnership yet since it's just our first property.

3) Tax reporting for 1040 Schedule E considerations?