Never invest in Longterm assets with short term debt.  

We prefer no debt (we are not from the US originally).

I will preface this with the fact that I have a legal background, specifically with estate planning and asset protection.

I have never done this just thinking out loudNo legal advice.

Perhaps if your partner was a general contractor or handyman type there may be some merit there to reduce costs / increase profitability.If your partner enjoys deal sourcing, a better move might be for him to become an agent - so he could legally collect commissions from finding deals and managing properties for multiple people. 

Im self employed, roughly make $130k gross anually, 1099 NEC , no debt at all, 740 credit score. 

In 30+ years we've been sued 1x (legal blackmail over a tenant's drunken trip/fall) which the insurance company settled for $1,500.00).We've been using some privacy tactics to keep our names off the county recorder and the target off our backs.Further, we review our insurance coverage and premium annually, just to keep on top of any changes.As with all insurance, it seems to be a waste of money... until you NEED it!

The income doesn't really cover expenses plus debt service. 

Are there other legal or financial consequences I should be aware of?

Quote from @Stylianos Kalamaras: Yes they are, they cost me $800 knowing they would not close my deal and waste my time, if I had any possible legal recourse I would take it they shouldn’t be allowed to operate it’s really sad.