Works great and I love that it’s automated so once you set it up initially neither you nor the tenant have to mess with it again. 

Our propeties have them along with other automation.

Has anyone entertained the idea of automating this process?

The issue is each month I am spending more time placing invoices, pictures, and other documents in folders, all which could and probably should be automated.

Not sure if it was a automated thing due to the date because house was dropping in price about every month month half and it was about that time.

Anything else though may not be worth your time or potential liability.True freedom is freedom of time, so if you can automate most parts of your business, then you're golden.

By doing this you are creating a very low risk cash flow instrument. 

Seriously, any instrument representing money is fine.

Mortgage is an instrument used to secure the note, if you were buying a house, borrowing money for the purchase there would be a mortgage or a Trust Deed securing lender's interest, it is not applicable for the 401k participant loan.

Then, is there an automated way that I can pay the LP their share based on the hurdles, catch-up needed to get to their IRR, etc?