Real estate investing is forgiving; the average person can still make money even with some big mistakes.

Hello Mike, It is nearly impossible to answer this question without taking a deep dive on the numbers of each but often times in expensive markets like Seattle the cost of construction is so high that it doesn't make sense to tear it down unless you can build something way bigger/nicer.

Average child owns 8% of partnershipd.  

I've included an example below to help illustrate this.So different lenders have different rates (which do vary even for DSCR loans) but these are factors they all consider.See example below:DSCR < 1Principal + Interest = $1,700Taxes = $350, Insurance = $100, Association Dues = $50Total PITIA = $2200Rent = $2000DSCR = Rent/PITIA = 2000/2200 = 0.91Since the DSCR is 0.91, we know the expenses are greater than the income of the property.DSCR >1Principal + Interest = $1,500Taxes = $250, Insurance = $100, Association Dues = $25Total PITIA = $1875 Rent = $2300DSCR = Rent/PITIA = 2300/1875 = 1.23If a purchase, you also generally need reserves / savings to show you have 3-6 month payments of PITIA (principal / interest (mortgage payment), property taxes and insurance and HOA (if applicable).

One of the big benefits of buying the whole thing on a fixed rate loan is that one of your major expenses is fixed for a long period of time, including the cost of the land. 

By providing the necessary funding and covering renovation expenses, we ensured the project stayed on track and within budget, leading to a profitable outcome.

Going to court to retrieve 5k would be really expensive...

A professional study, though more expensive, often identifies more deductions and is better for IRS scrutiny.

This is why...Now, one of you becoming a "real estate professional" is very beneficial for when it comes down to the long term of not paying more taxes.The good thing about being a "real estate professional" is that you can grab your whole income (w-2, rental income, dividends and interest) and then use the rental expenses/depreciation to lower your whole income.

I created an LLC to collect rent and manage any expenses related to the property.