Any signs of previous problems being covered up, or band-aid repairs?

I see a few high level ways of doing it.Scenario #1:- Both he and I co-sign on a loan for the building with $500K each in cash towards downpayment.- We contribute the asset to a joint LLC that we createScenario #2:- He takes out a loan and buys the building for his own LLC.- He then sells me a portion of the LLC for $500K.I see some pros and cons to both scenarios, but I mainly want to make sure that I follow the established process.  

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I’ll understand more thoroughly the entire process of making offers, signing contracts, inspections, financing etc.2.

Pull out the paperwork you signed with the first company, but I would imagine they have liability for any losses for sure.

Screening and selection of tenants is part of the risks we take when investing in real estate.

But I wouldn't have a For Sale and For Rent sign in the yard.

The REO manager stated he normally “closes” and signs paper work at a nearby restaurant by his house.

Looks like the negative cash flow is a sign.  

You don’t usually sign a new lease.