I would tend to agree with the other CPAs typically.The 500-hour test is one of seven material participation tests used by the IRS to determine if a taxpayer is actively involved in a trade, business, or rental activity. 

This allows you to test all the systems and the people involved.  

Companies that know what they're doing don't get involved with the race to the bottom. 

I just want to be involved and learn more so I could achieve more eventually.

The client can distribute proceeds through a private agreement without involving the title.

It may be easy to rectify, maybe not, depends on your jurisdiction, the issues involved and the City's stance. 

., FTC, HUD and others and the FBI does actually get involved to see if there is a pattern.   

The deal will involve complicated paperwork. 

I think if you are going to keep all three parties involved as owners of the deal long term then you need to separate yourself as a renter and a contractor.

In the Bigger Pockets free book, "Real Estate Rewind", as one of the 11 co-authors I wrote about one such Tax Sale purchase and made money but not enough money to warrant the risk involved.