If you're ever sued, a court can decide that you're not entitled to the limited liability that the LLC structure would ordinarily provide. 

In some locations if your tenants complain about something then you are automatically on the defense (more than ordinarily) and for some issues, like enforcing a lease, you loose because you didn't have the legal authority to lease that part of the building as a dwelling unit.

Or since you work with them, would you start giving them "exceptions" that you wouldn't ordinarily do?

We have a responsibility to disclose the true value of the home (as we see it) along with any other material facts that someone with our "expertise level" would ordinarily disclose.

@Ben Leybovich I respect your perspective and experience and therefore, will ordinarily, agree with you on this, but my personal belief in life is that 'Blanket generalizations are not always the rule'....these sub 30k properties are doing great in some other areas.

orDeterioration to state of disrepair – Amount paid to return the unit of property to its ordinarily efficient operating condition, if the unit of property has deteriorated to a state of disrepair and is no longer functional for its intended use...Step 3 - none of the 3 safe harbors apply (de minimis, small taxpayer and routine maintenance)Sorry, sounds like SOL to me.

Think about what ordinarily happens to you, then make it a little worse (or maybe double), then think about how you would pay for it.

This is huge to us because I'm getting to get started on my dream much, much earlier than I would've been ordinarily and he's getting a huge chunk of his mortgage paid down . 

This ordinarily wouldn't be a problem since the portfolio loans would work through an LLC, however my fiance and I are looking to purchase a single family home for ourselves within the next year.

I have told the purchaser that I will manage the rental free-of-charge until the end of the year so that we don't have to cancel a bunch of peoples' vacations, but I don't think it ordinarily works that way.