Many successful active investors transition to passive investing as a way to diversify into new asset classes or markets and to earn back some of their time and still benefit from the positives of real estate investing.To answer your question - I would allocate a portion of the $200,000 to MF as I believe this is a good time to invest in an asset class that has recently struggled. 

Second, I have a question about REPS status in a longer term sense.The primary benefit of REPS status, as I see it, is to take passive real estate losses, usually from depreciation and accelerated depreciation via cost-segregation, and use those losses to offset active income, reducing current or future AGI and tax burden.I’m clear about this benefit, but what I’m unclear on is the consequence in out years.For example, if I put $100K into a multifamily syndication, and the syndication does a cost seg, resulting in a $40K loss, I believe that a Real Estate Professional could claim that $40K loss against their other income and reduce their AGI accordingly.

Consult a tax pro to maximize these benefits!

I am new to this idea and in the beginning phases, so I’m not even sure what other questions I should be asking.

Yes the financial benefit is attempting, but I do want to understand all the legal consequences, including insurance issues before making a decision.

Thanks folks, it seems like overall it doesn’t make the most sense to start an LLC for real estate purposes due the cost and complexity, with few benefits here in California.

It will familiarize you with the basic terminology and benefits.

Sounds like they have a back door deal where the lender or loan officer and builder or realtor all benefit from using each other (which is illegal).

If they grew up on a busy street it wouldn't phase them to buy a house on a busy street.

If you are looking for long-term appreciation, another asset might work better, but you won't get the same benefits of being able to go visit it.