As I said, I think it can make sense to buy and hold real estate personally AND inside retirement accounts. 

I was wondering what everyone's experience with establishing a legal entity for REI has been like, and when do you recommend a person to do so?

I do believe for what you clarified from your original post that breaking even is okay and you'll be using it for personal use that you can do this. 

The property is a great deal so I'm hoping to refi down the road in the event interest rates come down to a reasonable value, then maybe repay most of the personal loan at that time.

I must not be the first one that is concerned about personal safety.Thank you!

Essentially my idea would be to sell 1/2 my interest, pay off the existing loan, and be "partners" with this person as long as there is a defined exit strategy. 

Condotels are also harder to finance, and therefore will be harder to sell to the next person when you want to do that.  

The court defined as “where a person intentionally intrudes, physically or otherwise, upon the solitude or seclusion of another or his private affairs or concerns…if the intrusion would be highly offensive to a reasonable person.”

He left behind some personal items and took a few of ours (it was partially furnished). 

As far as I am aware you can rent by the room in phoenix, I am not aware of any unrelated persons ordinances but you can check with your municipality they are usually starting at > 3 people that is what I believe would limit rent by the room.