Hi BP community need some help here please... My sister and I are working to partner up for a real estate business. We both currently have W2s looking to exit to become full time investors. I have my primary residence...

In addition, I live with my parents so even househacking will still cost me over $400 a month, which is what I pay to stay with my parents.

Otherwise, trusts can be useful but for the uber wealth when they setup the irrevocable trusts.Poke aruond BP. 

While you’re at it don't forget to set up keyword alerts for topics that interest you: http://www.biggerpockets.com/alerts If you haven't already, also check out The Beginner's Guide (http://www.biggerpockets.com/real-estate-investing), it is packed full of great info. 

In addition, I live with my parents so even househacking will still cost me over $400 a month, which is what I pay to stay with my parents.

Cost of securing the collateral is much more expensive here and foreclosures can be troublesome. 

In addition, I live with my parents so even househacking will still cost me over $400 a month, which is what I pay to stay with my parents. 

And  if we did a 1031 exchange later, I think I'm correct that having this cost basis established at today's market value vs 2001's cost + improvements would serve me better in the 1031.- The depreciation amount for my rental house would be maximized bc would be set at the selling price / current market value vs 2001 cost basis + improvements.

Either it's a setup for failure, and they know it, so no go.

Take into consideration all closing cost, realtor fees, repairs etc.