If you make the person an LLC employee you can get around it, but partner does need to be careful. 

You must report rental income on Schedule E and can deduct rental expenses like repairs, maintenance, property taxes, mortgage interest (allocated between personal and rental use), and depreciation for the rented portion.

Explore my personal favorites, Set For Life by Scott Trench or The Total Money Makeover by Dave Ramsey, for invaluable financial insights.3.

HELOCs are fine, but keep in mind that you really only want to use 50 percent of less (each) of your available equity just so you aren't creating a problem that you can't solve later if the value of your personal residences fluctuates.If you both have W2 jobs though, have you looked into getting qualified together and just getting a loan, 10 percent down each?

what kind of investment was/is this  a little more detail may protect others if you think this person is a financial predator.  

Personal guarantees are EXTREMELY common.

For lending, your rates are going to be higher than if you were to buy under personal name.

For funding, explore options like FHA loans, personal savings, or creative financing, and focus on New Jersey markets that align with your goals, such as Newark for rentals or commuter towns for house hacking.

Raising your credit score will get you far better rates personally as well as with private lenders for your LLC. 

Personal Financial Statement Borrower’s Schedule of Real Estate – or- Resume illustrating experience2-3yrs Personal & Property Tax Returns – All schedulesPrevious Year and YTD Property Profit & Loss statement w/ detailed expensesRent Roll w/ detailed lease informationCopies of all Leases3mo.