Builder Leaseback good idea?

[Greg Teplansky]

So we bit off a big one for a first investment! Wife and I just went to contract with a builder on a 2k sqft 4/3 townhome in a resort development in southern Utah. The deal is the builder will lease my unit for at least two years. I think we are overpaying a little bit but it is zoned for nightly rentals and may payoff in the long run. We will finance the 25% down with a loan at 3% from a life insurance policy loan and hope for the best on the conventional investor loan we will have for the purchase money. We plan to try it as a short term rental after the builder is out. Question one is, does this sound like an inherently bad idea to anyone? Question two: I know I should get this put into an entity like an LLC, maybe even Wyoming LLC, but should I spend the money to set this up before I complete the purchase? Obviously, we need to maximize our tax effectiveness in the situation and the monthly is going to be huge, especially if we can't get the rents to cover the mortgage. I considered one exit strategy if this doesn't work after a couple years, which would involve selling fractional shares of the unit while keeping half of them myself in hopes, the sale of the fractional shares would offset the existing mortgage and maybe put us in a winning position. Looking for opinions and input since I'm relatively inexperienced. Thanks.