By the time we paid the legal fees to our lawyer to do the conversion and the reduction in the balance of the loan took a major loss. 

The lot is big enough to where I may be able to make it a legal triplex but I'd want to explore both options.

Ever try reading a legal statute?

@Kristen NegrottiI have done this once before but charged 15% interest and 5 points and all interest was prepaid - basically what I am getting at is if someone does it, it is going to be very very expensive.

I'd wanna talk to others in. the fund and if they are a legit fund there are legal filings they need to have done. 

Thanks Michael, great info that I can pass along (while disclosing that it is not tax or legal advice since I'm just a Realtor® ;)

I guess the only good thing about a prepayment penalty is that is is considered prepaid interest on your 1099 statement which may help with tax deductions.

Make sure the bedroom has legal egress in case of a fire, either a legal sized window to the outside or a door. 

You will have formation costs, earnest deposits, legal bills, due diligence costs, etc that will likely all come out of your pocket initially.  

Is there any legal way to invest in this concept without being accredited as an investor per SEC rules?