Yes I understand what you are noting, and I believe on the commercial side of things they are typically not putting their names on the docs like you do for a resi loan but just brokering/underwriting it and collecting a fee as a 1099.

I will mention that a hot tub could really increase the frequency of bookings. 

And @Michael Plaks is correct that setting up in GA didn't avoid the CA LLC fee. 

For example, an algorithm can't compare a property that charges a flat fee for utilities vs one that charges based on use. 

What I love the most is two fold, the interest paid back on the loan goes back to you, the fees to do this are extremely minimal. 

I guess they think these investors are accredited so a fee structure is a good model.

I don't see anything wrong with that approach but there isn’t a complete alignment of interest (the individual who wants to take over all construction services will want to focus on the projects with the greatest construction fee earning potential; the brokers will want to pursue more for-sale projects etc.).

Paid in February but since that February only paid January rent he got another late fee for February. 

If the LLC and its income are entirely outside California, it typically does not require registration with the California Secretary of State (SOS) or payment of California Franchise Tax Board (FTB) fees, even if you reside in California.

Ask your lender about their recast requirements (payment amount and frequency).