We want to leave our options open but also want to find what niche works for us.If anyone in the Birmingham area has any good deals they need to pass on let me know ;)I'm really loving this community and the support you all give is an amazing gift.

The 3.5% can come as a gift and your closing costs can be paid by the seller. 

This is a lot better question than how to charge a late fee or what holiday gift to get for a resident.Well thought out plan and this illustrates one of the huge benefits of commercial real estate, even at lower prices than discussed here.I am not qualified to answer but your 20% appears rightfully conservative and your $7.5 million appears correct.We all come here for answers and I typically don't like the "see your CPA" replies but there are tentacles into the rest of your tax return that may need to be factored in if you don't offset or defer the gain and recapture (phase outs, AMT, etc.).Not part of your post, but another good use of cost segregation plus bonus depreciation plus real estate professional status is the possibility of performing a tax free Roth conversion...just brilliant...tax free in, tax free out.

If they have 5% of the money that is their own, (Not Gifted) then there are products that are available for conventional lending.Yet there DTI ratio will be a little less forgiving.

A wise investor once told me that below market rents are like me giving my tenants a gift each month. 

Likewise, by putting so much content and sometimes contradicting what others write, I'm exposing myself to personal attacks and I have to accept it even if they shouldn't happen.Maybe your reaction was a gift to me because maybe other readers thought I wasn't diplomatic enough so this might have been a good opportunity to clarify my thinking for everyone's benefit and to improve my writing/diplomacy skills. 

Gifts will not work. 

All contracts, options, or other devices not based upon a substantial consideration, or that are otherwise employed to permit an unlicensed person to sell, lease, or let real estate, the beneficial title to which has not, in good faith, passed to such party for a substantial consideration, are hereby declared void and ineffective in all cases, suits, or proceedings had or taken under this chapter; however, this section shall not apply to irrevocable gifts, to unconditional contracts to purchase, or to options based upon a substantial consideration actually paid and not subject to any agreements to return or right of return reserved.

That is the way lawyers set up businesses in the marijuana industries, in banking industries, in investment industries, in utilities...And just as I was explaining above, when money transactions happen between two of those entities, there is a paper trail (contracts, loan notes...) and NEVER any gifts (AKA contributions) that could appear as co-mingling funds.And, its definitely an interesting idea to set up real estate holding companies as layered entities.

I think you owe that neighbor a gift certificate to his/her favorite restaurant and a thank you note.