If I want 100k on a 100k exposure, that’s the number.

We got the house we wanted in the town we wanted, made some very minor upgrades and benefited from good ol' fashion California appreciation.Also if wanting to reduce your risk and exposure on your first BRRRR you could partner with a friend/family member.Lastly there are some more affordable parts of California or for your perhaps AZ that while long distance may be close enough for at least a few drives to the area to meet face to face with folks and get a feel for the market.

I didn't grow up in real estate and certainly haven't had a ton of exposure to it. 

You get free exposure to people who are in your target markets.

Furthermore the MLS gives a much larger exposure than the typical wholesaler 

Some companies do not want to write habitational buildings with certain business exposures (restaurants, Liquor stores, ...). 

I should be covered through insurance.So, finally, my question is: how do you limit your exposure to legal liabilities as you your real estate net worth grows, assuming traditional mortgages remain an essential part of your strategy (i.e., an LLC won't work)?

Lastly, I would review your current lease with your attorney and amend it to reflect the new commercial exposure. 

If it is true, would not having a PPM increase the sponsors exposure in a lawsuit in any way?

That can lead to opportunities and exposure you may not have had otherwise.