Partnership for first deal

[Kevin Delgado]

Hi, I'm hoping to better understand what I need to know and any pitfalls of a potential partnership for my first deal.

A little background, I currently rent in a very high COL city with high income and a decent amount of liquid assets. A friend from my hometown has a little experience in real estate(1 rental property + subleases primary residence) and has come to me with a deal on a property in our hometown.

His plan is to purchase a waterfront SFH, convert it into two units, and rent them both as short-term rentals. He wants to structure a partnership between him, myself, and a third partner that is a builder in the area. We will each invest and own 1/3 of the property with out-of-pocket costs consisting of 20% for the house and 100% cash for the renovations. The builder's company will be contracted to perform the upgrades and my friend will take a percentage of revenue to manage the short-term rentals.

The numbers check out and I think this is a good opportunity if everything is in line with what he says. While I mostly trust him, I don't want to have to rely on trust and am wondering what all needs to be considered and how I can best be informed and protected as we draft a partnership agreement.

What kind of reporting/transparency do you put into writing in a partnership like this? Presumably annual income statements/tax returns get shared amongst all partners, would it also make sense for the agreement to mandate more granular bookkeeping (such as on a per-rental basis)?

The deal is based on estimates around how much money/time renovations will cost. Given that one of the partners is the builder are there any protections that should get put into the partnership agreement?

Given that one of the partners is responsible for managing the rental, should the agreement contain any form of protection against the rental manager not doing a good enough job managing (bad reviews, cleaning/turnover issues, etc)?

I'm assuming we want to structure as an LLC, correct?

I'm sure any good attorney can help us navigate these questions, but I just figured it'd be helpful to be as informed as possible before bringing on an attorney. Open to any feedback and insight on deals of this type or just any required readings I should take a look at about deals like this, just want to hear some more voices before diving in.

Thanks!