This was a really good reminder that we need to put together some sort of operating agreement and some other policy paperwork as well but I'm not sure where the best place is to start or should we just get a lawyer?

The broker was initially trying to close the business portion first by 1/15/19 (which I think is why my father in law agreed to the transition date of 1/1/19) where the ABC license would close later and the new owner would just operate under a temporary permit or something along those lines.

All great advice.Follow up question... do you prefer to work with one-man operations or companies and why?

Small operation the Property Manager will know you as well as all of your tenants personally.There is a trade off though.A big company is a proven entity whit proven policies & processes.

It currently costs me around $1,000 just to own and operate while it is at full occupancy.

I’d run like a bat out of hell from a lagoon or a water treatment plant , though.Again, it is best to get some input from an experienced operator but consider this:  if a newbie who has just been reading books and listening to podcasts can pinpoint red flags, you know that’s a deal to run from.  

Develop an operating agreement that spells out the purpose of the LLC who has what role, who makes decisions, how are differences between the two of you resolved and an exit plan.Have an attorney draft up the document so each party is protected.  

AB 671AB 671 lowers costs through government incentives for building ADUs with affordable rent.The bill would require the Department of Housing and Community Development to develop a list of existing state grants and financial incentives for operating, administrative, and other expenses in connection with the planning, construction, and operation of accessory dwelling units with affordable rent.

Not to mention you can scale infinitely with a Series LLC.You can also set up an additional traditional LLC on the side to perform your "operations" that would separate the liability for operations from your assets, or properties.

We are changing the carpets in the home and come to find out, the dog has probably peed all over the carpet in the past causing the pad underneath to disintegrate.