Syndicators do this because most passive investors are not sophisticated enough to realize the "security" of the preferred return means they usually are giving up the potential for massive returns if the deal does well.This next comment would apply for all syndication.  

They have a group of funding sources that will compete against each other, this helps keep the final interest rate within reason, and offer a partial refund if they are unable to secure financing. 

Secure the debt by real estate, now we're talking a great partnership deal.

A good property manager can help with tenant screening, enforce lease terms, and handle evictions more efficiently if it comes to that.Require a Larger Security Deposit: Within the bounds of local regulations, a larger deposit can provide a cushion in case of damage or unpaid rent.Consider Rent Guarantee Insurance: Some companies offer insurance products that can cover lost rent in case of tenant default.

All channels can work.. it’s just that some work more often than others.I’ve got a friend who tried a similar stroy a few years back.. she moved out of her condo and rented it to a family member, using the steady cash flow to secure financing on a duplex that had a ton of upside potential.

@Shawn Mixundefined I agree Kirstin, Anderson isn't cheap but I feel much more confident and secure with them on my side.

I rarely see ledger boards secured and flashed properly as one example.

I believed I was putting that hard-earned money into something secure.

If I am doing the security deposit I want to quickly see how old that carpet or paint is.

While the co-signers add some security, the family’s newness to the U.S. and uncertain job situation make them a higher risk overall.