We have to begin by defining Turnkey - many people use this very loosely and it may carry a broad range of defiant as you engage with one operator to another.TURNKEY = accountability, economies of scale, easy access to expertise, passive incomeAsset that has been acquired in advance of any investor commitments by an operatorOperator completes renovation in-house (extensive, systematic, uniform construction material & methodology, implementation of resilient materials)Operator has an in-house leasing team Operator manages the asset in-houseNo MiddlemenDirect access to premium free assetIn-House Management StaffHome cashflows from day one as tenant placement occurs prior to transfer of title That is the most rudimentary definition of a real Turnkey asset and experience.

There seems to be a lot of laws regarding to wholesaling and I just want to make sure I"m not breaking any law by accident.

It occurs to me to form a new LLC for Property #2 and treat it as a separate investment, though it is linked to Prop #1 via funds from the refi.

If you can, chit chat with the kids.... they will often spill the beans.You have a legitimate need to be aware of what is going on, to confirm it, and to address violations of your lease as they occur. 

You need some kind of flapper valve to prevent return flow, but it is useless if your tenats keep running water once the back up occurs.

If you plan to go ahead, then spend a few hundred dollars with a good attorney to draw-up a partnership/shareholders agreement {depending if you elect to use a partnership or LLC} which defines the obligations & expectations of the partnership and specifies what happens at dissolution and how the process shall occur {all partnerships end}.If you can get the property based solely on your credit, then perhaps your "partner" signs a long-term lease with the company (LLC, partnership) and, if allowed under Minnesota law) pays 1-3 years rent up-front (your missing piece of the downpayment).Creativeness aside, this smells like trouble and your desire to help your friend could lead to making a poor purchase and a bumpy ride for the friendship.

Nearly all communication occurs through text.

Those applicants would be turned away at the Housing Authority.Non-violent felonies, like your 3rd DWI and felonies involving a vehicle accident are another matter.

As far as expectations for income - that is an interesting question because until a short time ago it never occurred to us that REI was something we could or would want to do.

As a dog owner I make sure to always do a thorough cleanup if an accident happens in the house in order to avoid the very scenario I just described.