At-Risk RulesAn At-Risk rule is a tax shelter that limits the allowable deductions that can be claimed by a taxpayer due to investing in at-risk activities that could ultimately result in financial losses.

I’ve done a ton of research read a ton of books and have ultimately decided being an agent is for sure the route I want to take getting my foot into this awesome world.

-My ultimate goal is to build a real estate portfolio to help me reach financial independence, but I currently own zero properties.

I think it is ridiculous to have a honor system because people WILL take advantage off of it and ultimately that leads to people assuming that people who REALLY need it are full of BS because of some bad apples...such is life.BUT, that is my personal feeling and that has NO place in my business. 

What I would suggest is to spend a disproportionate time on what your ultimate goals are and that way you can work backwards to see which strategy gets you there fastest.One unique aspect of multi family is that the assets are substantially valued off the Net Operating Income so in order to see appreciation you should have an achievable plan for increasing income and decreasing expenses.

That'll bust the gift theory pretty quickly...I think tax treatment will ultimately follow what the "partners" in this "informal partnership" agreed to...

I wrote a series of detailed posts about my experience transferring 3 different properties to my LLC with 3 different mortgage servicers, and I ultimately succeeded with each. 

Ultimately it is up to you whether to take the 401k loan. 

My only addition, @David Greene wrote an entire book about the out of state investing and it's been a very valuable resource for me as I've begun to diversify my portfolio (buying in Indianapolis).Highly recommend you give it a read:https://www.biggerpockets.com/store/long-distance-real-estate-investing-ultimate

Ultimately you may have to fire these guys if they won't perform.