1) if the person who gave the gift recognized it on their tax return as a gift you don’t owe tax, and there is a large gift lifetime gift limit (over 5m 2) property tax has nothing to do with income tax, which is what the gift has effect on.

Make sure and carry adequate insurance with high liability limits no matter what your situation.A final thought.....and I don't have first hand experience in getting sued but knowing others who have (in Florida), it is very unlikely that a judge will force you to liquidate a property, especially one encumbered by a mortgage, to settle a lawsuit. 

The project ended up going under, and I cut my losses at around $50k.

Aside from the extra paperwork,CPA fees, LLC annual fees, bookkeeping wise, it's pretty straightforward.Finally, you need it for banking purposes, so each entity has its own checking account, so each business would have it's own profit and loss.

@Joy Buell By making too much money you mean your adjusted gross income, which makes you ineligible to take losses from the rental properties? 

Remember, you do not pay capital gains taxes on the sale, you only pay taxes on the gain, if any (if you have a loss, you don't get any deduction since it was your residence). 

Fannie/Freddie loans will be limited to 75% LTV on a cash out loan no matter what. 

Few things are happening in 2018 which could impact:1) Fed will raise interest rates2) Fed will shrink its balance significantly 3) Lots of big retailer debt is coming due in 2018 and that will likely trigger bankruptcies and employment loss 4) Can the stock market grow?

I am in the same boat as you with limited personal funds and credit which has been a source of discouragement while I try to save. 

@Stephen KunenProviding substantial services to your hosts provide suggestions that you should report it as schedule C as opposed to schedule E.Substantial services include but not limited toConcierge, meals, housekeeping, cleaning, entertainment etc.A pro of reporting it on schedule C is that losses are deductible and not subject to passive activity rulesA con is that income will also be subject to self-employment taxes in addition to income taxes.