Lesson learned don't go in business with an x drug addict.

I agree that you should speak with local dealers.

I am a car dealer and one of my employees' hit hard financial times and was unable to continue making payments on their home.

A friend of mine is co-owner in a drug rehab clinic that operates in Southern California.  

Drug dealers start camping in the backyard (kept using extension cords and water from my units). 

Call the cops saying they are running a drug operation and they get arrested.

Fix n flips are typically dealer status income not capital gain.  

It sucks because Lonnie was a pioneer with his taking back notes on mobile homes and being a Lonnie dealer inside other peoples parks. 

But what if he has a drug history?

"The 123 Main St Trust"4.Set up a C-Corp in the state where your property is to avoid being taxed as a dealer and maintain coverage under that state's laws.Depending whether your property is a flip or a rental would determine how you structure your entities.This structure would benefit you both tax and liability wise.