You will need to work with a tax professional to analyze your current tax situation (income, deductions, activities, etc.) as well as projected income from the fix and flip business.The benefits have to outweigh the costs (payroll costs, additional tax returns, more stringent reporting and compliance requirements, etc.).One important note - an S Corp is not an entity; it is a tax election.

I am a member of RETA, haven’t pulled the trigger yet because the idea of paying and waiting two or three years for delivery on speculation keeps scaring me away

. - Uses permitted.SHARE LINK TO SECTIONPRINT SECTIONDOWNLOAD (DOCX) OF SECTIONSEMAIL SECTIONCOMPARE VERSIONSNo land, body of water and/or structure shall be used or permitted to be used and no structure shall be hereafter erected, constructed, moved, reconstructed or structurally altered for any purpose in an RU-2 District which is designed, arranged, or intended to be used or occupied for any purpose, unless otherwise provided for, excepting for one or more of the following uses:(1)Every use permitted in RU-1, RU-1M(a) and RU-1M(b) Districts.(1.1)Workforce housing units in compliance with the provisions of Article XIIA of this Code.(2)On lots meeting the requirements for two-family use, every use as a duplex or two-family residence, including two private garages.

If your total taxable gain is not small, then obviously you're going to see more value from going through annoying compliance with California. 

I do have an agent that is helping me on the side to find deal but for a person like me; completely fresh of boat, I have no idea what to look for and extremely nervous to pull that trigger. 

Skip the rent so you are ready to pull the trigger when you find a good one!

Could you trigger a due on sale clause? 

If your knowledge of construction is low, you'd otherwise be relying on the GC to do everything correct w/ a reasonable level of quality (inspectors just look for minimal code compliance).   

It's always a good idea to visit a city before you pull the trigger to purchase your first property.

Transferring your property with an FHA loan on it will trigger the due on sale clause.So, you should speak with an experienced real estate attorney.Of course, many will post here that they've done it and were never caught.