I was thinking of incorporating before make any moves.

Ask what he's looking to get out of such a financing arrangement and make sure you incorporate those with rock solid legal documents included to have it be a win-win for everyoneIf your concern is tying up rehab budget, communicate this with him to come up with as little down as possible.

For instance, even though I have my CPA, I work in corporate accounting and don't know all that much about real estate tax strategies.

j/k, I work in Corporate America as a sales rep.

I don't recommend this for individuals but in corporate structures with perpetual life or that beyond the term of the agreement can be done.

Does this have any effect on where my LLC should be incorporated?

When forming an LLC to hold real estate it often makes the most sense to incorporate in the state that you own the property.

My day job is in corporate finance, and my wife works in corporate accounting.

My company would put me in corporate housing, so I would not need another FHA mortgage.

You can add in all the language you want to with all of the misc. details you want to incorporate.