There are also other investment factors, appreciation and tax relief, depreciation and at the time of sale the recapture of depreciation, you don'y have these issues with other securities portfolios. 

He also has dubbed me "Mr Honest" for my information on reducing taxes.

Taxes have been properly filed each year to account for the rental income, however the first house listed has not been shown on taxes yet because we do not file this year's until next April.  

Later, it's sold and I receive 20% of the net profit.This is purely a money deal on my end (no involvement in rehab or rental).Question - If the property sells quickly (say, within 3 months), and since my profit is paid through a security agreement (I never have title to the property), how would this be treated for tax purposes?

If you want your contract to be enforceable then provide equitable consideration, not this $100 junk.0 interest will really tic off a seller when they have an imputed tax on interest and depending on how you led them to accept such a deal can take you to court.

Also, if this is a refi, there shouldn't be a transfer tax/survey on the loan.

- Owe taxes?

I'm young and hardly know anything about taxes in real estate.

Also if I were to prepay the entire term of the lease at once, could I apply that to the single years taxes, or does it need to be taken over the course of the whole lease (3 years)? 

I believe the state where the LLC/LLP is organized will want a share of income tax on those properties by default and you will have to demonstrate (through more forms) why they should not if the properties are in another state.