The problem with that is the one they invest in might be the one that breaks even or loses a few grand and you'll be the worst person in history and they knew they shouldn't have trusted you. 

I just think having the profit secured for you, and making the cash flow a more predictable number will help you all mutually benefit from this transaction over you and your husband putting $100k into the game for an eventual $2m in liabilities and hoping to hit the break even.All those numbers are purely hypothetical of course, but I would probably talk one of my clients out of jumping on this opportunity as you phrased it. 

I don't ever advise building wealth by breaking the rules or the law.

I have a STR in the city of Santa Rosa and it has been really profitable from April- Sept, but the winter is breaking even.

When something significant breaks, are you going to your relative and ask for money to fix it? 

“Hey if you don’t break this it’s still $40” I don’t think that’s going to fly let alone I doubt there’s a systematic way to make it work. 

I've heard that the right contractor can make or break you, and it sounds like you agree.  

I would be more then ok to just break even monthly for 6 months - my other rehab should be sold in 2 or 3 months & that would give me enough capital to purchase the property with cash.

Here is an excerpt from an article on the subject that I believe breaks this down fairly well:Gain, to the extent of the depreciation claimed that exceeds what would have been allowable under straight-line depreciation, will be recaptured as ordinary income, and, thus, taxed at rates as high as 35% in 2003 and later years (ordinary income rates), but the amount of excess depreciation subject to recapture may be less for certain low-income housingGain, to the extent of the depreciation that isn't recaptured as ordinary income, will be taxed at a rate of 25%.The balance of the gain will be taxed at a rate of 15%Example – In January 1986, you paid $1.3 million for an apartment building (not a low-income building), of which $1 million was allocated to the improvements.

In fact, what you pointed out:  an LLC is a hedge of protection which serves as pass through entity is a nice way to simply break it down.