So, knowing whether I was buying from the original owner of the property or whether there was a quick title change to a wholesaler during a double close would be very important to me, regardless of whether I was happy with the property and price.Just another take on the situation from a rehabber's perspective...now, all that said, I'd be surprised if you couldn't have determined this information based on the title search, the contract and the closing documents...

It shows 2 couples as owners, both having 50% ownership.

She then transfer's ownership of the property to her qualified plan.

I think you must be referring to the Preliminary Change of Ownership Report?

Would they get hit with the usual 10% penalty if they don't show legal ownership in their name?

Steven Hamilton II, I really didn't doubt the tax issues as you pointed out, but the ownership and actions required by the entity in title, totally unrelated to tax issues.

Ann makes a good point as well as to your ability to cover small property losses, it's part of property ownership.

A good place to start:http://www.biggerpockets.com/renewsblog/2010/03/10/determining-maximum-purchase-price-mpp/

The way I am leaning towards is to look at it in a combination: look at number 1 and determine that it is both cash flow and net income positive, and therefore since the equity would otherwise be doing nothing that this is the good use of the equity (a positive vs. a zero), then to assess if the second property is a good decision based on number 2, and make the decision the same way I would make any purchase decision.

If you don't have the cash to do your own projects, find another rehabber and volunteer as his intern to learn the ropes, learn how to spot a good deal, learn how to estimate rehab costs, learn how to determine ARV, build a buyers list, etc.Once you have all those things under your belt, then start to focus on wholesaling...