What concerns me is any lien that would prevent me from refinancing the property.Thanks,Matt Make sure the mutually agreed contract is compliant with DPBR, some states are very specific regarding flat rate vs T&M contracts.

The other factor here would be that, The IRS states that, to do a 1031 exchange, the taxpayer for the property you are selling has to be the same for the replacement property.  

It seems that if my parents transfer the property to a LLC in which each owns a 50% interest, the default federal tax classification would be a partnership if we do not live in a community property state and the property is not located in a community property state?

There are so many so be sure to filter by your location. 4) Review Dave Meyer’s The State of Real Estate Investing Report 2024 (in your resource page as a member of BiggerPockets!)

Have you considers any other states? 

Don't use some unknown entity from another state that no one here knows.I think both of these companies will shoot you straight. 

Also, with being an out of state investor, picking a property that needs renovations seems really intimidating for my first rental. 

Contrary to multiple letter writing campaigns and already being historically the 4th highest state an overall tax burden according to the Tax Foundation, Vermont‘s legislature has apparently just increased the state M&R tax to 12% which appears to bump it up to the 4th most taxed state in the country for short term rentals, according to the National Conference of State Legislatures: 1.

At least that's how it would be in my state.

Another tenant, in another state, is breaking the lease and moving out...I feel like the markets are oversaturated with rentals....