Annually, the Management LLC would "distribute" to the Property LLCs, but it would all flow thru to your 1040 Schedule E - unless you get partners, which would require a 1065 return with K-1 distributions to the partners.

Quote from @Jim K.: @Alecia LovelessOne thing I'd like to add to the discussion is that the drawbacks to having a tenant like this in an 8-unit usually far outweigh the advantages of getting rid of them quickly and effectively.

Thank you Ryan for displaying the requirements!

@Dale K Poyser After doing further digging, I noticed that my neighbor's duplex (same size, condition) is still on old assessment and it wasn't updated but mine was.

Thanks for those kind words @Steve K.. 

I remember some of the loans I made there 3p appraisals at 120k my HML at 75k and sold the asset for 35k once i got it back... in other markets it was not that harshI look at the deals i did in Detroit in 01 to 03  again appraisals over 120k HML at 60K BC it was Detroit.. in the melt down and even today those homes trade at 10 to 30k max  and the folks that generally got wiped out in those days were the out of state investors that were buying these as rentals for even cash flow or 100 to 200 a month Pos. like they are today... mainly because of the market freeze and the issues you have with out of state PM and tough tenant bases... and the investors regardless of LTV or cash flow were severely under capitalized to begin with.. some one who put 20% down on a 80k turn key thats 16 k and maybe had another 5k in reserve's many of those got hammered and wiped out...those with significant reserves or paid cash survived

Then the day of the closing I get the HUD and the wholesalers is making 15 K.

Quote from @Steve K.: Not all agents are equal though.

Quote from @JC K.: Hi!  

Pass through entities are similar, but are more commonly known as S-Corps or Partnerships where the income "passes through" to your individual return in the form of a K-1.