I have read that it is incredibly important to keep your business finances and your personal finances separate should you either be audited or sued in the future.

Yes for someone who is working full-time, you will definitely want to make sure you have solid documentation to substantiate REP status as that is something the IRS would likely challenge IF the return is selected for audit.

When they are being picky, it is just to protect the integrity of their paper trail for the regular custodial compliance audits they undergo. 

The letter then talks about the risks of using a discount broker, all the ways the agent can net the homeowner as much or more than a discount broker, makes an irresistible, completely risk free offer for a “Free Home Audit” and a “Free Special Report”.The agent also uses a few great testimonials and statistics about their success (proof).

on both MF and SF business models  and have participated in MF road trips (both educational and acquisition trips) and participated in due diligence for other members (lease audits, unit walk-throughs) and have met with various lead investors to pick their brains. 

Quote from @Mike Hern:Today during my audit, by the nice man at the IRS (I filed an amended and requested a refund ;-) I am full time real estate with no W2 income.Anyway, he said "Since I am using a Non Passive Single Member LLC to buy properties, sell properties and manage rentals, I should be putting my properties on Sched C, subject to self employment tax instead of Sched E.

I'd rather not audit past activities to 17,000+ posts to see!

I took that information from Pub 946 (2023)https://www.irs.gov/publications/p946Anderson Advisors said that the most commonly audited are the small single members that file on schedule c and schedule e, so that is making me cautious.There is a cpa that I have been meaning to get a consult from, but I was trying to make sure I had all the questions I had listed before wasting time on just the basics. 

You do have to be mindful of CA code and make sure your docs include the specific language for equity purchases for sellers in foreclosure (if that's the case).Any attorney who says purchasing property subject-to existing liens or mortgages is illegal has failed the audition for your team.

I've wondered about this same situation before, my concern is always how my real estate commission will look at it in an audit.