If the property contains a residential structure, you can do any necessary repairs to make the property habitable (but not upgrades) and the VALUE (not the cost) of those repairs is an additional charge if there is a redemption.

@Ned Carey, given the wording of your second paragraph (second sentence), I take it that you were being sarcastic when you wrote: "Wow cover both their and your closing costs - never heard that one before"?

LOL  If there's going to be problems down the road, their advice or forethought as to the planning/building of the structure, at least the flooring/layering on top of the existing structure, is going to be sooooo vital. 

Speak to a real estate attorney as I cannot really give legal advice on this, but I have seen clients of mine structure this as a leaseback. 

If my property was residential in nature, I would seek a residential in a nature fee structure.

I know that Sandpiper and Pelican at Destin West might be harder to do with VA because of how their covenants were structured by the initial builder.

Strategic renovations, like removing a wall to create a larger space, proved essential in boosting value and rental potential.Challenges:Managing renovations, especially structural changes, was challenging and required careful planning.

This amounts to lost opportunity because if you had purchased RE, at the closing it can start producing return. 5) ADUs detract from the existing structure whether this is privacy, a garage, or just yard space. 6) this is related to number 1, but there are many more buyers looking to purchase homes for their family than there are RE investors looking to purchase small unit count properties.

We also use a trust structure to help protect the transaction when needed.I do agree with you that having the dollars to pay off the mortgage if something occurs is best practice. 

Let's break down the pros and cons of each approach:Forming an LLC in the State Where the Property is Located:Pros:Compliance with Local Laws: Establishing an LLC in the state where the property is situated ensures compliance with local regulations and laws specific to that jurisdiction.Legal Clarity: It provides clear legal jurisdiction and may simplify any legal proceedings related to the property in that state.Perception: Operating with a local LLC may give tenants and local authorities confidence in your commitment to the community.Cons:Additional Costs: Setting up and maintaining an LLC in another state means incurring additional registration fees, taxes, and possibly hiring local legal counsel.Administrative Burden: Managing multiple LLCs across different states adds complexity to your administrative workload, including extra paperwork and compliance requirements.Tax Implications: You may face tax obligations in both the state where the property is located and your home state, potentially leading to double taxation or complexities in tax filings.Managing Through Home State LLC:Pros:Simplified Management: Handling all properties under a single LLC streamlines administrative tasks, reducing paperwork and simplifying tax filings.Cost Savings: Avoiding the need to establish multiple LLCs in different states saves on registration fees, legal expenses, and ongoing maintenance costs.Consistency: Uniformity in management practices and legal structures may contribute to efficiency and ease of operation across your real estate portfolio.Cons:Legal Exposure: Operating out-of-state properties under a home state LLC may expose your personal assets to the laws and liabilities of the other state, potentially diminishing the liability protection the LLC offers.Compliance Challenges: You'll need to ensure your home state LLC meets the legal requirements for conducting business in other states, which could involve additional filings and fees.Perception and Credibility: Some tenants or local stakeholders may prefer dealing with a landlord who has a local presence, which could impact your reputation or relationships in the community.Ultimately, the decision depends on your specific circumstances, risk tolerance, and long-term goals.