@David SwitzerThe ADA Guidelines do allow a steeper slope than 1:12 if the site conditions of an existing building can meet the criteria.

They are effectively like any other syndication (by definition they are a syndication), but put in place a legal ownership structure to accommodate 1031 proceeds.I understand why they have higher fees than the typical syndication, given the complexity in their ownership structure compared to a "typical" syndication.At the end of the day, any return from a syndication (typical or DST) is going to be primarily driven by market cycles.  

Here’s a simplified breakdown:Lease Agreement: Since your buddy signed a 12-month lease in July '24, he is legally protected until the end of the lease term unless the lease has specific clauses allowing early termination under certain conditions.No New Lease Signed: Since no new lease was signed for the new home and no formal agreement was made, the original lease terms for the townhouse still apply.Landlord’s Request: If the landlord wants to break the lease or has changed their mind about the swap, they would typically need a valid reason, like a breach of lease terms, or might need to negotiate an agreement with your buddy (buy out)Legal Advice: Your buddy might consider consulting a local attorney or legal aid service for advice on his specific situation.

Typically they involve higher leverage, faster closing time frames, and more flexible guidelines, but at the cost of higher rates and shorter term loans.  

Make sure to open a separate business account for the LLC to avoid co-mingling personal and rental funds.Unless legally required, avoid getting MMLLC as it requires you to file a separate tax return.

The reason for this is that it will help you fit nicer into the lending guidelines and make your refinance much easier if you ever need to access the equity to scale. 

Legal status of titleHere’s the personal information you’ll need to determine1.

Questions: 1) Is this a good structure OR should I keep Operations LLC (Y) separate from Parent Holding LLC (X) and not under it to avoid any legal complications ?

Remember, we are FOLLOWING Fannie/Freddie guidelines here.  

Why not look at a duplex or place with a legal suite and you can live in one unit and rent the rest of the house?