Flipping is a business, and when a tax-exempt entity engages in a business on a regular or repeated basis, then it has exposure to tax on UBTI that can be as high as 37% federal.

I have a friend that just bought one, so I'm shadowing him to get some exposure.

It's a fairly recent (last 1.5 decades) item in Canada and has now become pervasive and all but replaced *real* diligence from your attorney ... at a fraction of the price.Many/Most lenders are apt to insist you secure title insurance to cover their exposure ... whether you purchase the complementary coverage for yourself is {still} discretionary.When we {cash} purchase a property that we know is a complete "gut" and rehab, we may not bother with title insurance unless there are indicators of potential title issues.

They could sell their house to an investor subject to their existing mortgage without losing money on the sale, and maybe even get some money at closing if there's a big enough spread.An investor may want to do this because they only have to pay the closing costs to get into the property, so their exposure is very low.

Seems there are some real disagreements on best approach, though all agree with insurance as a base protector, many stating that until you hit a certain threshold portfolio size/equity LLCs may be overkill.Then there is risk of calling loans due based on quit claims at close, restrictions on warranty deeds, and additional risk exposure by having title transfers.  

It's difficult to find because using the purchase price for the basis of the loan in the first 12 months helps to limit the exposure of the lender.

or the exposure from FSBO?

Have you tried using a home listing website to increase exposure?

You exposure is better listed on the MLS, which is easiest with a realtor involved.

all,thank you for your time...what happens to our legal risk exposure if we payoff one of the rentals.