What you put out of a way for parties to transaction to wrap transaction cost's into financing, is EXACTLY how we got to today's system.

The harder part is enforcing violations.

In my case, I have residential rentals in one LLC, commercial properties in another, self storage in a third, and my real estate company operates in a fourth.

I'm new to the party.

I actually ended up securing a lease on the third, but took a 2.5 month so I'm already concerned for next time ha.

If so, the first thing to agree upon is the purchase price because the other interested parties are owed their share of the CURRENT VALUE not of the $500k paid ~40 years ago. 

Then Ground-Up Construction Loans are probably a third category, all under the "Private Lender" bucket

The point here is - it isn't just buy some rentals and get a third party property manager, in order for you to get the direct tax benefits against your pension / W-2 income, you could readily be required to invest anywhere from 100-750 hours per year. 

You could aim to get the studious, low key, chill type of tenant as opposed to the rambunctious party animals typically found in a college setting thus avoiding the types of "confrontation" that are likely to come with the latter.

Get a good understanding of disqualified parties and prohibited transactions.