Micheal Let me know If I am getting this wrong If you used the borrowed fund to acquire the limited partnership interest, then the interest expense will be characterized as passive, and if not limited by passive loss limitation, it will be reported in the Schedule E.This is better and correct way of treating the interest expense as you dont lose the deduction if you don't itemize the deduction at personal level.  

The checks just don't come in the mail.I used to characterize these properties as a graveyard for amateur investors. 

I think there is a case for building in a market characterized by scare products like 2-4 family in Wake county, with historically higher demand than SFR, where margins may make for an opportunity worth pursuing. 

I'm not sure I agree with @Ashish Acharya's characterization of them as taxpayer friendly though.They are also commonly ignored, both because people do not know about them and because it's a major hassle.

My thinking is that since I can put that $25K into an environment that will yield 20%-30% annualized ROI with tax free Roth characterization, I may as well take the tax hit for cap gains and SE tax now then grow that money tax free in the Roth soloK.

I do not agree with how you characterize IBC as a marketing system or that the typical IBC policy is not fully overfunded to the MEC limit.

Characterizing a rental property as a “luxury” property is a stretch.  

How is this characterized on my K1?

A better characterization would be "option fee". 

So your entire capital gain might be characterized as dep recapture if you had help the property for long enough with full depreciation.