Buying investment property is a great way to build a portfolio that delivers wealth now and sets you up for a comfortable retirement in the future.

I believe there is a designation for "Highly Compensated Employees" (HCE) which allows my company to limit how much I can contribute in order for my company to meet certain rules set by the IRS that are necessary for the company to even offer a 401k.

There is another rental in town that is renting a set $600 per room, furnished with necessities (beds, dressers, sofas, and appliances...) utilities included and laundries.

Looking for some input from this vast base of knowledge on the pros and cons of setting up an LLC or S-Corp for my company structure.

In terms of specific data sets its a trial and error thing. 

My thinking is that I need to create a set of business accounts using my name as the owner and flow my income/expenses on these first two properties though those accounts and then have a separate set of accounts for the LLC activities related to any new properties.

If they are only up to say an FHA buyers tastes, you likely wont be able to move them as getting the condo association set up to meet FHA underwriting guidelines is a lot harder than one that meets conventional loan underwriting.

The way it sounds like you have it set up now, you and your investors interests will always be at odds.

What is a fair way to set up the partnership?

Even if you're living in it.One thing the city really don't like and are cracking down on is the larger apartment landlords who one way or another force/trick renters out of their RSO homes and then set up like hotels.