Many do not if the property is going to be used as a business (a rental etc).

If he has a business as S Corp or C Corp there should be filings with the state. 

If you have credit card debt from the rehab, you're under the gun to either get it rented, or sell it (and being under the gun usually leads to poor business decisions, like renting to unqualified tenants or forced selling). ...as I always say "the best time to buy a car is when you don't need a car, and the best time to sell a house is when you don't need to sell a house"    ...If renting it is too much of a hassle, and you go to sell it, you may find that it sits on the market for months (because again, sub-$100k properties are usually a very niche thing)...if you have credit card debt from the rehab, and the property isn't renting or selling, that's obviously a bad situation...It's also worth considering how much this property will rent for after the rehab.

Would we still be able to draft up an operating agreement even if we don't get a loan within a business entity (LLC, trust etc..)

If you can't, you'll be out of business and none of the "how to" stuff will matter anyway. 

That's the nature of the business.

You are not in the landlord business you are in the hospitality business.Hope that helps!

This opportunity was a blessing bestowed upon me and I got into the real estate business so that I can pay it forward.Now we moved away from Arizona a few years after buying the house, so we rented it out for years at $1,395/month.

Include this in your sales pitch when reaching out.3) Offer STR services to build up cash and get your foot in the door...Cleaning, eyes on the property, landscaping, running to the store, small tasks such as a mail collection/trash day, offer a STR experience such as setting up for bachelor/bachelorette parties or grocery runs, etc...I think there's a missed opportunity with service based businesses and STRs. 

For credit score requirements, Washington state law discourages setting minimum scores unless a "business necessity" is demonstrated.