Take a look at an operating agreement from an LLC (you can find in the files on here) that spells out these things in detail.

I've seen some wholesalers say that they are consistently getting deals on the MLS- their method involves making LOTS of lowball offers.

My question is, should i file for an LLC while i am educating myself  or stay as a sole proprietor and wait until I get my first property?  

Under that structure you would be regulated by the SEC and the whole deal should be structured accordingly.If you are planning on having some level of active involvement in the operations and not completely relying on someone (The GP in this case) to manage your capital with the expectation of future financial return on your invested capital then you can go ahead and just go the "partnership" route.

Unfortunately many giving advice on here also have no idea of the risk involved in renting to certain tenants and will give the wrong advice.  

Understand the fees involved and calculate the total cost for an entire year of management so you can compare the different managers.

Furthermore, lets say you are have a top marginal rate of 22% (taxable income of $38,701 to $82,500 filing single; $77,401 to $165,000 filing married )--you would then be paying $4,400 to $5,170 in taxes on the recapture.

If I file a complaint with the BRE, and they issue a desist and refrain letter, what happens if the "property manager" ignores it and continues to practice property management anyway?

Stay involved, stay positive and you will get to where you want to be!

sign a W9 and issue the 1099 to debit your end or your entity and they receive this as income and they file the income at their rate while you deduct it at your rate.