Hi all - not Sam but Sam's husband. I figured I'd give you an answer as opposed to allowing my wife to translate.
Dave - an LLC affords the owners several advantages from both a tax and legal perspective. Most importantly, an LLC provides the group of owners the luxury of seperate legal liability. As you may know, an LLC, like an S or C corp, may exist and operate as a separate legal entity under the law. Hence the need for an operating agreement.
As far as an operating agreement is concerned, our agreement has a contra asset account for the individual items you mentioned - R&M, ect. The reserve account can be administered in sevaral ways, i.e. credited annually, quaterly, monthly, or in an other fashion the partners deem most appropriate.
With respect to management of mortgages, the most common issue involves "joint and several" liability with a single mortgage on the investment property. That is, does each and every partner want to be liable for the other partners share of a single loan. I would suggest that no one opt for that position for the very reasons you mention in your post - change in economic status of one partner can adversely impact the other partners fiscal position.
The best situation is to have each partner pay cash for their respective share of the home and not mortgage the investment property. That will allow each partner the peace of mind to know that the property is not collateralized by any other partner. In a perfect world, that ends the mortgage issue.
Now, short of that, if the partners wish to place a mortgage upon the investment property, it can be structed in a couple of fashions to limit the exposure and joint and several liability of the partners. One way to do this is to allow the LLC to hold the mortgage as opposed to the individual owners. There are some other hurdles that must be addressed by the partners and the underwriter of the mortgage for this type of arrangement to be successful (i.e. a significant portion of cash down at time of purchase and a mortgage balance considerablly less than the appraised value of the investment in question).
Additionally, if each owner in the partnership wishes to collateralize the home with an individual liability, then this would need to be done through a single lender. For example, if there were 3 partners, each partner could apply for an individual mortgage collateralized by the investment in question through Bank X. If Bank X issued three individual mortgages to each of the three partners, then Bank X would be the only secured leinholder of mortgages on the property. At that point, rank secured order of the mortgages would not be an issue (1st secured creditor, 2nd secured creditor, ect) becasue there is only on lienholder and it is Bank X exclusivly.
The daily/weekly/monthly administration of the payments can be handled in a number of ways. In our agreement, the partners will assume officer postions in the business (as is the case in any business). The officer roles defined in our agreement carry certian responsibilities. Of course, you also may consider outsourcing payment services to a thrid party.
I am sorry for the dissertation. As a disclaimer, I must say that the statment herin are netither specific professional accounting nor legal advice. You should always discuss these issues with your CPA or attorney prior to engaging in any such investment.
Casey