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?

One of my wholesale lenders used to be willing to finance these, I can't remember the CLTV requirement of the top.

It will be a can of worms for sure and they may go as far as requiring a full tear out and fresh submittal.

These tax deductions do not require you to become a real estate professional.

Also, in regards to a per diem, I'd like to be a bit more optimistic that I can establish the right checks and balances to ensure that the contractor is not skipping corners.

I have some news for you, FHA does NOT require a 1 year work history!

As a licensed contractor and real estate agent, I can review your estimates, ask the questions you might not know to ask, and help you make an informed decision that balances cost with quality.

However, when seeking a non-recourse lender, I suggest starting by reaching out to lenders who specialize in working with self-directed IRAs, as they’re more likely to understand the requirements.

I did not know of this time log requirement for STRs, so as a newbie I am going back through emails, texts, phone logs, invoices, etc. to determine how much time I spent on everything.  

Both turnkey properties and properties requiring minor rehab can be viable options.