@Otis Clayton To partner in real estate effectively, establish a clear structure like an LLC for liability protection or a Joint Venture for single projects.

Is it for liability protection?

It sounds to me like you're acquiring a liability. 

I've been researching the topic of limited liability and the different options to achieve this.

Could they hold liability, sure, but so do you.... 

You are also opening yourself to major liability.

If the net cashflow is negative, it's treated like a debt/liability for DTI.

However, if it’s not necessary for liability protection, you might avoid the headache altogether and just beef up your umbrella insurance policy.What’s your take on this now?

These expenses can create a paper loss, which may offset other passive income or carry forward to future years.If you qualify for Real Estate Professional Status (REPS) or actively manage a Short-Term Rental (STR), the losses can be applied against your active W-2 or business income, reducing your overall tax liability.

In my experience, it's crucial to be aware of these state-specific rules to avoid unexpected tax liabilities.