Either of your ideas are smart, so there is no disadvantage of either.

In other words it works how all partners decide that it will work and I can see the advantages and disadvantages of each method for the 2 parties (like that you pay less total pref if you reduce the principal along the way and the other way around).This also explains why the lawyers have no opinion on this when I ask them, since it is basically a business question and the lawyers will write it whatever way the sponsor and investor decide on a case by case basis...Thanks again for the great content.

- What tax advantage(s)/disadvantage(s) do you get; the 401K grows 100% tax free (but then you pay taxes upon withdrawal); with the REI, you'll have tax, but also numerous deductions.Taking a stab at a very simplistic analysis that doesn't account for everything in the above, but why not it's a fun mental exercise :)- 25K of cashflow accounts for your vacancy rate, maintenance cost, property management (i.e you're paying yourself to manage them before that 25K) and so on; i.e it's free and clear.- 1MM of property increases in value at 2% annually in appreciation (making a rough guess that at 100K per property you're in a C neighborhood with low appreciation rates?

@Daniel MillerOwner occupied live in flips have their advantages and disadvantages.

A big part of real estate is trust, and you are coming into this with a disadvantage having a criminal record, but you know that already.

The lack of competition was what I was excited about in doing the off market deal, but it sounds like the disadvantage is having to work a little harder to find that market value.How would you approach a realtor that wouldn't be getting any commissions to help you on a deal like this?  

HELOCs also have their disadvantages, since most use a variable interest rate.

Also what are some of the advantages and disadvantages to this type of transaction.

Less is better for them, which is an advantage and a disadvantage for me that I have been trying to think about.

I do not think 60 day escrows are an advantage to either party and mostly a disadvantage to sellers, however.