Crime is a concern, but I'm thinking with the appropriate limited liability and insurance structure this could provide a reasonable shield.

Although we are in Temecula, we are located on the wine trail which is outside of the city limits.

You seem to believe cash and financing are your limiting factors and if you were only going to buy 1 property that might be the focus, but to buy many deals you need processes in place to find opportunities.

If a limited partner is in a tax bracket (earning less than 50k per year) approximately how much would they owe in capital gains after the asset is sold? 

VERY limited circumstances though, a very last resort. 

We're building this inside the city limits so we are slowed down just a bit by the city inspections.

I have 5+ buy and hold properties,  i have limited cash right now for another down payment, my debt to income ration hits almost the limit.

They are limited doc 

My question however, is for short term rentals there - licensing is taking place such that it is possible, owners may be limited to 50% of the year, making investing in a short term rental more risky.

This approach can save them money and allow for a more streamlined transaction, but it can also limit their reach.