There's nothing wrong with the practice as long as the sponsor is disclosing what they are doing and they are recapitalizing at a basis that provides substantially similar economics to the investor as would an arms-length sale.In the institutional space there's little room for fraud because the outgoing institutional LP has analysts and is sophisticated enough to detect any nefarious intent, plus they probably also have some major decision rights. 

So far here's what I understand needs to happen:1) Remove and dispose of pipes and machinery like the pump and filter.2) Make holes in the concrete lining so that water can drain (or even jackhammer the entire lining into pieces and bury them, not sure).3) Fill the hole with clean fill. 4) Compact the fill and get a compaction report (required for city pass inspection, and also to allow future construction on the site).Anything I'm missing?

Here, he would be entitled to his interest (and points if he’s sophisticated enough to require them) and you would keep the remaining profits.Only about 1347 variations on this, but those are the basics of an equity interest and a debt interest in a flip.

All other additional informations (rehab estimates, rent estimate, cap rates, ROI) are unnecessary as any sophisticated buyer won’t trust your numbers and will always end up doing their own due diligence.

We do residential demolitions of decks, drywall, insulation, and the like (no heavy machinery).

Some examples of properties with high asset reclassification include medical clinics and hospitals with technical machinery and labs, groceries stores with machinery, shopping centers with rain water drainage systems and large parking areas, industrial manufacturing facilities with advanced equipment, apartment buildings in suburban areas with swimming pools, golf courses, tennis courts and large parking areas for tenants.Here’s a list of the average amount of assets that can be reclassified into shorter asset life classes based upon the type of property.

Many partnerships often do a 50/50 spilt - one party supplies funds, the other all the work.More sophisticated arrangements, like syndications, trend to 80/20 or even 90/10.You're situation is more complicated as you'll be living in one of the units.

If the seller is sophisticated and the contract you've used is not tight he could sue you for non-performance even though you don't have any $. 

With your connections within the industry, I'm sure you have access to some very sophisticated investments and opportunities.

Homeowners have become more sophisticated and many understand that it is usually foolish to sell their home off market compared to going to market and stirring up a bidding war.Along with that, less homeowners are interested in selling due to rates are going up, plus if they sell now many ask the question "with housing prices having gone up so much lately, if I sell, where would I go?