I figure doing my own flips and renovations will offer the highest potential for long-term profits with my current situation in a rural area.

Otherwise, profits are lower, it's hard to find compelling deals, and there is little room for error in deal execution. 

I appreciate your comments about providing ongoing education but it seems even this is a real gamble.... at least for the renter. 

If you finance 50% of the property (with a non-recourse loan), then 50% of the NET profit is taxed after you deduct all expenses and, yes, depreciation from the portion you financed. 

I've been told they can be extremely profitable, but I seem to be missing the point.

Predictable appreciation is not a gamble or speculation. 

So if we have $100 of profit and I own 1% then I get $1 at the end of the year. 

With these entities, any profit earned from the rental activity is “passed through” to the owner or owners’ individual tax returns and they pay tax on it at their individual income tax rates.Thanks.

To keep it cleanest, I would think your sibling should pay market rent for the separate business space and they get their share of the profits from the building as a whole per your agreement. 

Own one home and just signed on a second for a tiny profit.