@Alex Hamden, If he sells you the membership interest in the LLC he recognizes a gain on the sale of the interest. 

However you need to recognize that is only 1 metric out of many ways to evaluate a property.

Would the IRS recognize that we're no longer renting after two years and negate our exemption?

Some folks are willing to take the risk in the gamble for appreciation, especially here in CA, they are typically purchasing when the market is down, not high as it is now.

The way to make it less annoying is to gamble (like a dollar) with your family for which property the wholesaler wants before opening the mail.

It is not gambling per se, there are real wells with real chances of finding oil, but it is not another class B multifamily value play for sure.   

I’m not planning on buying anything else right away but want to take a year or two to thoroughly educate myself on how the market works, how to finance safely, how to find and recognize good deals and anything else that would help me make good choices when I get some money to invest.

You are looking at a extreamly high risk gamble regardless of your past experience.

I obviously didn't recognize the hidden gem that is BiggerPockets at that time because I didn't come back until late last year when I committed to making my first real estate investment.

Some people hedge their bets, and go 50/50 fixed/variable (or some other ratio according to their best gambling/research beliefs, but then focus on paying one down quicker than the other once rates actually change).