Planning to invest w/ several friends - buy & hold (turnkey or ?)

[Kellan Martz]

Background: Two friends and I have been meeting to discuss investing in real estate together. Pooling our finances and our risk is the reason, plus we work well together. We have run a nonprofit together for the last 2.5 years, so we have weathered some of the challenges and learned how to work together. We are also aware of the risks of working with friends. I am a real estate attorney and have experience setting up LLCs, writing operating agreements, etc. (my firm does affordable housing development) and I've spent time doing landlord-tenant law. The other two are not sophisticated in real estate, so I would likely be taking the lead while they would be contributing financially and also making decisions on the larger matters (while I would probably handle more day to day issues).  

Market search: We do not want to invest in our home state of California due to the market cost. So far, we have focused on Kansas City, Indianapolis, and Oklahoma City but are not tied to those areas. We want to find a buy and hold property with a cost of $50,000 - $125,000. We would hire local property management to handle the property. 

Deal Structure: The property would ideally be held by a single purpose LLC formed in the state where the property is located and we would have a strong operating agreement in place to try and avoid as many problems as possible. We plan to finance and put approx. 20% down on these property. While we want buy and hold, we have not discussed an exit strategy in terms of how long to hold for etc. Our goal is to purchase by late summer 2020.

We would love thoughts on all these topics, but specifically on the market question and the deal structure idea. Also, if you have invested with friends or family in the past - your advice would be greatly appreciated. The good, bad or ugly.  Thanks in advance and happy new year to you all.