Once they transferred the home into an LLC taxed as an S-corp or partnership they broke 121 rules.Section 121 only applies when the individuals own and sell the home.

Setting up a new LLC for each flipping project is a common approach to limit liability, but as you mentioned, it can get tricky with all the bank accounts and bookkeeping.One option to simplify things is to set up a holding company (LLC or C-Corp) to own the individual LLCs for each project.

Personally I love what you are capable of doing I am just not very good at it so I outsource to individuals likes yourself with right set of skills.What type of investing are you most interested in? 

This house is inside the city limits so we have to pull permits on everything....

People still need affordable housing.

The good news is the house appraised 35k over purchase and I had some of closing paid for.

It’s not that it can’t be done — it’s that most lenders want:One unified lease covering the whole property, not multiple individual ones.Market-rate long-term rent comps that match what they can verify (hard to do with individual rooms).Here’s what a lot of investors do to make it work:Have a single “master lease.”

We believe the change starts with us and each individual out there who seeks purpose and belonging...

The way it works is that you set up a Series LLC, then you setup individual "Series" or "Cells" under the series LLC for each property.

Source: Our REIA had one of the the previous housing court judges come in as a speaker and he did a presentation based around the most common issues landlords have in housing court.