(make sure you audit it and give it a peer review).

We invest exclusively in the midwest and have found an audited return of 31%+ over the last 12 years.

Yep, it's all legal until the forensic audit happens.

The cost is 3k and they will back you up if you get audited.  

Apparently you can take the same write offs personally as you can in an LLC, just keep track of expenses diligently and be ready to defend them in an audit, which you should do for an LLC anyway.

Local appraisers who  are qualified are placed on a list and assignments are rotated through that list.Mortgage bankers or wholesalers who purchase loans from banks will usually have a list of qualified appraisers and the originators follow that list to sell to them.There is an "audit trail" for the method as well that the lender must be able to show, it can be by the date and time of the application with the order for services, so there is no selecting your buddy.This doesn't apply to commercial loans, but it also depends on how many qualified appraisers there are in a lending area, if you have 15 MAI qualified appraisers then rotation would be a good practice, if thee is only 1, there isn't much choice. :) 

It also becomes a business/probability decision as well because the reality is that I have been doing these for right around 14 years and have handled several a month that have exceeded 20 plus million and never once has a client be selected for an audit. 

The downside is that you are likely to have to deal with regulations, MLS fees, paperwork, trust accounts, audits by the State, etc.Unless you are planning to scale up rather quickly, just working as an agent under a broker might be the easiest thing to do, plus you will learn a few things from them.

The next time there is ever any re-determination of intent is upon audit when you will be subjected to the opinion of one person - the field agent handling your return.  

If you get audited, you would have to be able to demonstrate that you had the intent to buy and hold for investment and not buy, rehab and sell/flip.