When it comes to flipping it seems to get a bit more complicated.

The first pillar of asset protection is avoiding unnecessary and risky activities (don't drink and drive, insurance generally won’t cover your poor decisions) and take good care of your investments(maintain your property, etc) - these simple steps will help you prevent lawsuits before they even occur.The second pillar is a good insurance policy as that cover the majority of your exposure.

If Person 2 cannot pay cash, then it gets a lot more complicated, although not impossible to arrange.My major concern continues to be that Person 1 is 40 and if they have earned that bad credit from onging bad financial behavior, this situation is likely to end badly and ruin every family reunion for years.

It's not really that complicated to buy out of state.

This is not what I wanted at all, completely unnecessary for the ADUs I am offering  and my target market. 

IRR is a complicated calculation. 

My main issue is that the closing costs is such a big amount vs the down payment (for properties I'm looking at), so I don't want to inflate my returns by not including them.Please let me know if I'm over-complicating this, but I welcome all views.

Even if it is friends, there may be securities law issues, which get quite complicated.

The need for a real estate estate license is unnecessary.

Looks like you are confused, which is fine becuase this is complicated.