I was able to negotiate about 10% discount that was purely circumstantial, I'll let time do the appreciating passively instead of running a 6 months construction project with holding cost.

In addition: I would withhold more money for completion.

For example, certain states like CA and MA have "claw-back" provisions, some states have withholding requirements, PA has some funky 1031 exchange laws, etc.Work with a rockstar QI (like @Dave Foster) and a real-estate-savvy tax professional to ensure you don't fall into any traps.

If you are in this business long enough you will undoubtedly arrive at situations where taking the small loss even if not fair or warranted based on the circumstances is best if it keeps everything moving and avoids more costly delays, liability and inconveniences.In this case, if you withhold the $2K, you still have to find someone to complete the work to your satisfaction.

I agree with you with holding the property.

Quote from @Alan David: i HAVENT MENTIONED THEIR PRACTICE OF WITHHOLDING ANY FUTURE EARNINGSON THE INVESTMENTS ONCE YOU MAKE A DISTRIBUTION REQUEST, IN MY CASE THAT IS TWO YEARS( SO FAR) WITH THE FUNDS JUST SITTING IN MY ACCOUNT DOING NOTHING.i IMAGINE IF THEIR FUND HAS A LOSS i WOULD BE  SUBJECT TO THAT TOO.  

Often there is a process to withhold rent and deposit it with the court until the issue is resolved.

Yet, when I initiated a withdrawal, I was met with a complex set of terms, penalties, and withholding conditions that were never clearly explained beforehand.

@Matt J.As an out-of-state investor in San Diego, key tax and legal considerations include filing a California non-resident tax return for rental income or capital gains, managing double taxation with potential tax credits from your home state, and complying with withholding requirements on property sales.

looking at your breakdown, the margin leaves very little room for error, especially with holding costs and commissions eating into your profit.