You paid $2m for it two years ago w/ 25% down (it was suffering from mismanagement and deferred maintenance), invested $325k in capital improvements, and it's now valued at $3m with an NOI of $195k (cap rate assuming $3m value is 6.5%).

Furthermore the local experts can confirm the following: (1) the use is allowed, (2) the use requirements can be protected by permitting and licensing and (3) the permissions are transferable through a sale.

Here’s a simplified breakdown:Lease Agreement: Since your buddy signed a 12-month lease in July '24, he is legally protected until the end of the lease term unless the lease has specific clauses allowing early termination under certain conditions.No New Lease Signed: Since no new lease was signed for the new home and no formal agreement was made, the original lease terms for the townhouse still apply.Landlord’s Request: If the landlord wants to break the lease or has changed their mind about the swap, they would typically need a valid reason, like a breach of lease terms, or might need to negotiate an agreement with your buddy (buy out)Legal Advice: Your buddy might consider consulting a local attorney or legal aid service for advice on his specific situation.

I used their ultimate plan, which has rent and eviction protection.

But if you plan on doing more spec homes, the LLC would likely offer more benefits through legal protections (obviously speak to your attorney about this) and potentially tax savings if you look to file as a S-Corp.

This structure is not cheap to setup initially, and the annual admin costs are substantial, however gives peace of mind that it offers the ultimate liability protection and most efficient tax structure. 

Hi TylerThat land trust would protect buyer in case BK , that's the standardized strategy I would suppose.

A well written management contract should clearly spell out what is expected of both the PMC and the owner, to PROTECT both and avoid misunderstandings.

If it protects building by not shifting ground I will replace with concrete one.How to find how much life is left with existing retention wall?

I also only lend on non-owner occupied properties.”None of this protects you, @John Jacobs.