The trust and the LLC are the owner of the asset/real estate, so even in the scenario that they guess, they guess wrong.There are still many other strategies ranging from offshore trusts to equity stripping, but those need to be executed correctly and within the correct strategy, otherwise you end up working against yourself and throwing money away.

Its a massive gamble for sure.

Would it be risky to open and offshore LLC in order to pay less taxes on the profit made from flipping a house?

Again, not funny.we have had fake wire instruction e mails twice.. and intercepted them.. there is some big money gets stolen this way.. think average home owner sending their 200 to 500k down payment in .. thinking its going to escrow and it ends up off shore.. that's why title companies have big disclaimers.. and the State of CA came out with a mandatory disclosure doc for all us brokers.. warning the buyers and sellers.. 

With both units being occupied and with only a few days remaining before the auction closed, I took a gamble and placed a bid. 

With a few weeks under your belt, you are gambling on knowing the values of the properties and if the numbers truly work.

By the way, know your numbers is extremely important, tools like Biggerpockets calculators could help.Stay open-mindedIf you never trade stock or do any kind of gambling, lucky for you.

So knowing that we wouldn't need a variance to turn the attic into a 3rd legal unit, we gambled and took out the rehab loan to maximize the potential of the house.

It's a gamble.

You are fortunate to be in the Midwest, we have an insane opportunity here and don’t have to gamble on appreciation.