This means that if anything goes wrong with the property—like a tenant getting injured or a lawsuit related to the rental activities—the LLC, not you personally, would be the one held responsible.

There are seven tests, however the most relevant tests for STR investors include:Perform substantially all the work related to the activity.Participate over 500 hours during the tax year.Participate over 100 hours during the tax year and no one else participated more.If your property meets one of the exceptions above AND you meet one of the above tests, you can qualify to treat your rental activity as non-passive.

Here are things that would not transfer with a sale:-2.5% interest- prop 13 property tax benefit is saving ~$40/monththese are awesome advantages that are tough to match   In addition you have achieve outstanding return from the appreciation since purchase.On the other hand, you have $300k of equity which places the LTV at ~65%.  

But, again, if you friends  in Indy know a thing or two about investing and can partner with you, where you both have a financial stake and they get "more" of the pie relative to their equity contribution in order to oversee the success, that would be the ideal scenario in my book.As for broadly in markets, both are considered pretty good.  

@Yonah Weiss what do you mean when you say “ tax benefits are gone”.

Post regularly to update us on market trends, deals you're analyzing, and any opportunities you think would benefit investors.

Again, there is a value that should possibly be compensated if their names are not going on the mortgage but they are splitting ownership and other benefits (IMHO).There are probably a number of other easily overlooked items to consider.  

Nothing is owed on the inherited property.My question is, with the costs of building new still relatively high, would it be better to subdivide and build on the current property or use the equity of the inherited property to buy another separate income property?

They do hundreds of transactions a month and can guide you better than most attorneys when it comes to title issues.They use a complicated form that creates extra work and confusion with no benefit to the buyer or the seller. 

In the next 1-2 yrs I'd like to move out to either a bigger place or a new new city (job related relocation etc).