Joe that is the way its suppose to work and exactly how we did our sub toos  as you point out though when this technique starts to get marketed to the NO money no Credit RE crowd its going to cause some severe headaches for Sellers and Buyers.you hit the nail on the head of Chris's situation I am guessing and if I was buying paper like his fund does I would do EXCATLY what he is doing buy discount have the right to accelerate and get cashed out spins the APR meter dramatically for an investor or a fund. 

Worse are the paper asset brokers. 

There's no proof in paper so that we can catch them.

Hi Steven, the best hard money lender will meet the following:1. be willing to work with you (ie lend you the money)2. give you the best rate and terms3. require minimum paper work from you 4. minimum collateral5. they have deep pockets Once you find a good hard money lender, make sure you treat them right.

And can you absolutely lose your shirt if you buy on the wrong street in the wrong neighborhood even if the numbers look great on paper and that property has nice countertops? 

As one who started in this business with carbon paper.. then NCR paper  then fax copies that just faded.. to plain paper fax to scan and e mail ..

My tenant, who has renters insurance as per the lease, said that he did not file any damages because he just had to throw out a few towels that were on the floor.

My understanding is that if you provide 'hotel-like' services, provide sheets and towels, and your average stay is less than 7 days, you can use Sch C instead of Sch E like most rentals.You got good advice here, but definitely do not trust what your Tax guy says, because they just don't know.

We have learned the hard way if there is a problem, we need a paper trail and it's much easier to resolve with Airbnb that way.

I’ve always preached, paper figures aren’t real life figures.