Experts say it can be risky for an investment fund to operate this way, since it may require ever more participants to be brought on board, rather than making money from its business.More than 60% of RAD’s operating expenses in 2020, the most recent period for which the company has released audited financial information, consisted of asset-management fees and other payments to a separate company owned by Mendenhall and other RAD executives called RAD Management LLC, according to an analysis of the financial data.Those fees and payments amounted to more than $730,000 that year, RAD said.ADVERTISEMENT“We have limited operating capital, few significant assets and limited revenue from operations,” RAD wrote in the January document, which sought to raise up to about $58 million in new funds, for a total of $75 million of company shares.

I come across people with limited credit history and/or no score.

They could have owned the home for many years and if homesteaded, are limited to up to a 3% increase each year.

I immediately did the wrong thing and started assuming this person has limited time in investing in real estate (which was a correct assumption).

. -- appears to have some properties that would cash flow well, but may be limited on long-term appreciation.I'm looking to stick to market-rate properties.  

Using cash is great if you want to keep all the profits, but it can limit your deal flow. 

THEY ARE NOT LIMITED TO ONE PROPERTY.So, they can 1031 to 2 or more additional properties OR 1031 into a rental property plus a DST so that all the profits are used up in the exchange. 

@John Clark I ran a nonprofit for 5 years and considered that option for this strategy, but, for a lot of reasons, it would be more limiting in the long-run.

For example North Carolina is $40,000 or less, Texas there is no limit, and so on.

This limits their RE Investment options to RE that does not have huge negative cash flow.