Electing S-Corp taxation is not a move to make to change liability exposure.

@Paul Rowan I doubt many brokers would be interested in the potential liability if there is no cut for them.

I am not limiting myself to Washington, if there are good deals in other market areas I am willing to check those out!

If buying a commercial investment (Multi-family 5+ units or retail, industrial, etc.) you may need both Commercial Property insurance & General Liability insurance. 

I know having a LLC/LLP would not offer a lot liability protection as the property is titled in our personal names.

The money person has zero liability & zero ownership of the property.

Since she is young, I've explained to her the important of assets vs. liabilities.

Hey @Paul Zackey and @Alex Cornwell,I have Limited experience, but I know a few contractors who do it (I cant personally reccomend) and a mortgage officer who is very familiar with them.

He is trying to obtain financing, however, he poses a huge liability risk for me.

Their investment is absolutely passive and as @Basit Siddiqi said when they pass their heirs get the step up in basis so the gain disappears and they can start over with inherited property and no tax liability.