Most straight forward and honest way to do things is:(1) Accrue enough cash to buy a house(2) Find a house for a great deal because you have cash and can buy it no prob and the person needs it gone now(3) Sell house for more than you paid(4) Repeat steps 1-3

Once purchased, that property will have continually-accruing expenses until it has sold again.

So amount of preferred return dollars will be higher for the 85% partner, since they have a more capital in the deal accruing a return.

Once it does you have two options: sell and use the accrued equity and income to buy a better investment.

We hung around the hoop, as 3 or 4 other buyers went in and out of escrow with the Seller before we locked it up.Regarding financing, the Seller agreed to a Seller carry-back loan amount of $3.45 million; 5% IO, 84 months, no prepayment penalty and (this is the best part) no debt service for the initial 12 months (however it does accrue to the principal balance).

So, going back to my objective of building a portfolio, I don't see how one can pay off the loans in 5 years because the rentals will not accrue fast enough to have the loans paid off.

It is stored in an LLC and has accrued some equity.

From a legal standpoint, however, I wouldnt be surprised if your parents' attorney were then able to claim that you lived at the house and should therefore have to accrue a certain amount of money that would have been collected had the house been rented.

You may run into issues with underwriting & getting approved for a second primary residence purchase as it can very well look like you are doing it to accrue rentals with low down payments, as mentioned above. 

What other fees are accrued at closing.A nice niche to think about  is lenders who have programs where you don't pay interest on rehab funds until you actually use them.