I am emotionally involved in my current house because of my neighbors.

Later, it's sold and I receive 20% of the net profit.This is purely a money deal on my end (no involvement in rehab or rental).Question - If the property sells quickly (say, within 3 months), and since my profit is paid through a security agreement (I never have title to the property), how would this be treated for tax purposes?

Show them the risks and benefits of a flip and the passive income of a rental.

@Mike Lee, to answer some of these questions we need to understand the concept a little better (need specific on rate of return being offered, etc) and assess the risks/reward.

Show them the risks and benefits of a flip and the passive income of a rent property.

Since the crash of 2008, property has been the asset of choice for investors looking to make returns. Regardless of stock market turbulence and currency crises, the value of property, and the returns available for inv...

Are there any risks/costs we need to plan for when we transfer the 2 existing properties in Arkansas to the LLC?

I would say get involved in some aspect of real estate though, local meetups, read through the BP books and look for a house hack.  

My gut is saying this is more risk than you should be taking on. 

Again, each person has different risk levels and it is important to stay true to your views on risk, but hope this gives you a different perspective to then make a sound decision.