@Wade Wisner -  Most of the notes that we purchase we keep in our portfolio and borrow against them with private capital.

I think that is more of a question for your attorney and the answer will likely vary by state.

My state is very fair to landlords, but there's no way to win this scenario.

However, if your business owns real estate, that portion of the sale may qualify for a 1031 exchange, allowing you to defer capital gains taxes by reinvesting in another like-kind property.

Through wargaming, it is easy to see how the motivations of the operator can become very misaligned from that of the investor when they use a Preferred Return or Waterfall structure.  

(I REALLY can’t stand state income taxes.  

These two loan types are among the few exceptions that permit closing directly in the name of an LLC.Most of my clients initially take title in their own name, then later transfer the property into an LLC or land trust for asset protection or tax benefits.

As others said out of state can be more challenging based on location but local or out of state both can be done. 

Contrary to what I read online my lender never questioned the condition of the property.

Especially for the Southeast / Sunbelt region of the US.