We audit several different areas a couple of times a year but we have a pretty tight system in place.

Suzette,Stay away from any company that offers you a Loan modification or a foreclosure "Audit" and what ever new name they call it now a days.

Even "tax attorneys" are typically attorneys that defend you against IRS audits and lawsuits, not typically people you want to go to for specific tax advice.As @Logan Allec said, you want an attorney for forming business entities like LLCs for asset protection, or for drafting any contracts or agreements necessary for your flip business (partnership agreements, etc).

You have the advantage.Plus having both you and your dad's names on the title instead of an LLC might lead to the IRS audit (even though I'm pretty sure it will be nothing, but it's just a hassle).Again, consult with CPA and Attorney for the best setup.

That "not responsible for stuff".Audit the minutes and books of the company, audit operational and any escrow accounts, it's better to leave some money on hand and pay for it, keeps accounts open.

I know loans are not taxable income, but I'd like to avoid getting audited.

I would talk to your CPA because in the event you are audited, they are the one that needs to explain.

If I got audited, the poor little IRS agent gets to go through the boxes and they can sort them out for the source documents, I wouldn't let them see my photocopies!

Keep in mind that the deepest purpose of these records is a trail of evidence for you to use in the event of an audit. 

And if you go ahead and report it as an investment property on Schedule E anyway, and the IRS audits you and finds out it was a personal use property (which it sounds like it is), you had better have some money saved up for penalties and interest.