My question is - how can we structure the payment portion from our parents in a way that does not bring on tax liability but also does not require our parents to stick their necks out by being "on the title , LLC, etc." and increasing their exposure?

First, each property needs a Landlord  policy(LP), which provides fire, protects the lender from loss and you from public liability (some up to 1mill ).Second, an umbrella policy adds protection on and above the LP.I hand each tenant a copy of Renters Insurance so they can protect themselves.

If you sign for personal recourse this means that you could get deficiency judgments and a whole lot of personal liability for something you have NO CONTROL OVER unless you hedge the risk properly by financing the product the right way to begin with.I am always in favor of paying more for financing and getting fixed product.

You open yourself up to personal liability if anything should go wrong (during rehab, someone gets hurt above and beyond your insurance coverage, and most importantly, after you have sold it, the buyer could come back at you and sue for something).

Yes, you pay a one-time formation fee and only one annual filing fee for the master LLC, but for liability/asset protection, you STILL have to do separate operating agreements, separate dba's (that means licensing fees), separate bank accounts, separate accounting, and separate EINs for each series!

Fire pit in the back yard sounds like liability to me.

Tax liability may also depend on whether you are the sole owner of the LLC.

There is no bank that I know of that will assume 100% liability for any property otherwise lenders will be doing no down payment loans.  

With so many people involved, we think it would be a much better option for liability reasons.  

Does the landlord needs to protect themselves from any potential liability from handymen?