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If you are just doing some co-op while you are both on I'd say start by just trying to invite him while you are online. He/she will just have to play in a solo world If you are not online. If you find after a while that you want to be contributing to the same persistent world and not depending on the other being online, go for dedicated.
If you have a good internet connection you can also host out of your house. Just leave the dedicated server running on your computer and leave your computer logged on. Again, you don't have to be logged into steam for it to work. Then, when you want to play you just log into steam and join that server.