However, I believe this depends on whether your investors are passive or active partners with voting rights.

There are some waivers and exceptions to the primary residence exclusion for active military that may leave you eligible to take some if not all of the proceeds tax free.By they way - a great accountant who knows real estate in and out just gave you some good guidance.  

I would express the concerns not only around the liability, but unless you are willing and able to sell a foot of the property to him, you can potentially have major issues when trying to sell the property.

While undergoing the compliance training I came across one of the prohibited outside activities for bank employees- "acting as a real estate sales person, broker, agent or engaged in buying and selling real estae except for primary and secondary residence".

I'd also toss in that you want to take a more active role in the community and that him selling this to you give you that chance.Sounds to me like this guy is going to value time and sense of community over dollars and cents...

Since the major benefit of the LLC is asset protection,  you won't be needing that much in the beginning starting out with our own properties. 

We just completed a total gut in the West end area and the total cost was 130K for a major rehab.  

But then again, haven't yet found an easy and quick route and I also know normal people like you and I with 15 or more active projects.

Today, you need to target heavy rehab projects, listings about to expire, those that went from pending back to active, or those with high days on market. 

When it comes to pre-foreclosures and REOs, I just want to make sure there aren't any major pitfalls that I need to be aware of.