Those who run such a failed operation surely will have significantly degraded the assets and operations as well.

We operate in a broken system that is ripe for abuse and fails to protect us.

The operator's track record may not align with your goals (you are long term cash flow play, they are sell and redeploy, or vice versa).  

Hey Becky,When you sell the property, the LLC will still technically own the property until it is formally restructured, so you will need to amend the LLC’s operating agreement and update its ownership structure to reflect the change, ensuring the absent partner’s interests are properly dissolved, and taxes are handled accordingly.

Passive investing takes time up front to educate yourself, find operators and deals - but after you invest, you have limited obligations.  

Even small-scale operations like beekeeping, organic farming, or growing specialty crops (e.g., lavender, hemp, etc.) can generate income.Hunting Leases: If the land has good wildlife, you could lease it to hunters during the appropriate seasons.

No, but I don't operate below B class.

Also having a higher proportion of revenue generated through the residential component of the building does make financing easier. (3) The exception to the 80% rule I abide by is when the commercial space is leased to a credit tenant with a proven & sustainable business  or where the space presents the opportunity to attract a neighborhood amenity F&B operator (this is most beneficial in instances where you have a larger localized portfolio where these commercial tenants can positively impact the value of your overall residential portfolio).

But like with all laws unless its enforced and has some teeth wholesalers wont give a rip they will just break the law and keep going until they are stopped.I wonder what companies like Great Western are  going to do. they have a big philly operation that deals in the low income areas where a lot of these deals are done. 

Several things to consider: 1) One of the main purposes of segmenting your assets into separate LLC's is so that your personal net worth or equity in other business ventures or properties isn't exposed, so unless you have a high net worth or a lot of equity in a property, it might not be worth bothering going the separate LLC route, especially when it restricts your financing of the property.  2) Most any commercial financing you get from a local bank for a small property is going to have recourse anyhow and require that you sign a personal guarantee, so you're still personally on the hook to the bank even in the case of a commercial loan.  3) If you're a newer investor and buying a deal that's tight on cash flow, or if you don't have a ton of cash sitting in the bank already, your greatest risk factor as an investor is your investment failing economically due to poor financing terms or not operating the investment properly, not because you get sued.