This isnt true -- but with anything, convenience costs. 

Rehab project was supposed to cost $50k.

Once the problem is resolved, find a qualified PM company and transfer the management.A lawyer is going to cost drastically more than $28 per month.

See here a couple diagrams to help you in this quest:Asset Protection Decision Diagram - to help assess the need for asset protection, and what to implement : https://www.biggerpockets.com/files/user/CosIorg/file/asset-protection-decision-diagramAsset Protection Onion Diagram - what, when and at what cost one should implement in terms of asset protection - https://www.biggerpockets.com/files/user/CosIorg/file/asset-protection-onion-diagram-v2

So they take a 4 bedroom house and make it a 6 or 7 bedroom, which will cost you money to do initially.  

While initially enthusiastic about the potential of the property, upon inspection, I found myself overwhelmed by the extent of work required for its rehabilitation.As a beginner in this field, I must admit that I feel ill-equipped to accurately assess the necessary renovations and calculate the total cost of rehabilitation.

It's key to keep learning, look into different ways to pay for places, and think about ways to share housing costs.

The plumber who I spoke to says the pit in the picture is really big and the cost of labor plus gravel/concrete to make the pit smaller plus the cost of replacing the ejector pump is 5K.

Total resale is looking to be $285,000-$290,000 which leaves us with about $50,000 in net profits after lender fees, closing costs, holding costs, and minor renovations.

If you like the location long term appreciation-wise, and think you may be able to raise rents and create cash flow in the near future, and aren't concerned with cash on cash return/ the opportunity cost of having money tied up in these properties as opposed to putting it to work elsewhere... maybe your main goal is just a safe place to park your money... then you might consider keeping them or even putting more money into them so that they cash flow (refinance with more down).