But, this being a larger syndicator they do have professionally made presentations and due diligence documents for you to look through.

It's crucial that this allocation is reasonable and well-documented to withstand IRS scrutiny.

•Document everything – Ensure the transaction is structured at fair market value, with no special benefits to any family members.Bottom LineIt may be possible, but because of the family connection, the IRS could scrutinize the exchange.

Also be sure your PM is documenting everything if you already started demo and rehab.

I had to have an awkward conversation with my favorite realtor when their broker suggested everyone had to pay a $700 “document fee” on every sale.

What documents do they require, what credit scores do they allow, how do they verify previous rental history, etc.?

Speed of building a portfolio (Cash-on-Cash return is a factor here)?

I recall looking up their LLC in Florida, even though some documents mentioned California.If you’ve had any interactions with these people, please reply below and let us know your experience.

Improvements that DON’T drive the ARV as much: Windows, Landscaping, Driveway, Rough Plumbing & ElectricalI agree with @Jaron Walling about meeting the appraiser at the property and providing documentation.

Syndication Reporting IssuesMissing Form 8918 for reportable transactionsInconsistent investor disclosuresRequired registrations skippedWhat Doesn't Actually Matter:(Despite What Your Uncle's CPA Says)Special AllocationsNormal promote structuresStandard waterfall provisionsTypical developer promotesReality: Unless extremely aggressive, IRS rarely caresTechnical DocumentationMinor §704(b) gapsCapital account glitchesTechnical allocation languageTruth: Unless hiding something biggerProperty Value AllocationsNormal basis step-upsTypical appreciation splitsStandard promote calculationsReal World Example:🏢 100-unit apartment complex4 partners, $5M dealDeveloper promote structure= Zero IRS interestSame Deal With Red Flags:🏢 100-unit apartment complexHidden partner arrangementsArtificial loss allocationsUnreported debt shifts= IRS AttentionPractical Protection Steps:Basic Documentation✅ Clean operating agreement✅ Economic substance✅ Partner contributions tracked(Don't need War & Peace complexity)Economic Reality✅ Allocations match economics✅ Real money movement✅ Actual partner participationClean Reporting✅ Consistent K-1s✅ Required forms filed✅ Clear communicationThe "Sleep Well" Test:Can you explain your structure to an IRS agent without sweating?