water turkey said:
I know we have to charge her market value, but what are the steps we need to follow?
Establish LLC before buying the house, etc?
Do I go see a CPA to get everything set up?
You could also buy it as a second home for you, unless your income doesnt support it.
As far as the LLC - If you are going to keep it as a rental once she moves out, then an LLC isnt a bad idea, but if its only while she's in it and you are the 100% owner, then there might not be a point. A CPA can opine on Tax strategies, but an attorney can talk to you about the legal ramifications and actually set up the entity. It will probably cost you around $1,000 to get it set up.
LLC's can mess up financing, but I'll let the mortgage experts opine on that.
Not sure where the "market value" comment is coming from. Is that a requirement from somewhere you saw? The mortgage underwriters aren't going to count that as income to qualify the purchase.
Only word of warning is to realize that your 19-year old daughter isn't going to make a very good property manager, i.e. dealing with problem tenants, collecting late rent, maintenance, etc. So you need to plan for that.