There are other audit trails I'm not going to mention.

we have 45+ accounts & after our 2012 IRS audit it proved to be a wise accounting decision. 

i found the article below to be pretty informative.http://www.biggerpockets.com/articles/1332-hud-223-f-pros-and-consi have also talked to a family friend who paid the prepayment penalty and refinanced out of the HUD loan due to: frustrating annual maintenance audits and the onerous annual financial audits (that he had to pay a CPA to do for him).Just wondering if anyone on the forum had any firsthand insight on this stuff.

The PM was very forthcoming as well (I think he was auditioning just in case of a sale but I have my own PM).

The fact that it has wood foundations worries me a little for holding it for years and years(despite inspections/audits looking closely at them and finding no issues)...

His clients haven't been audited for the past 12 years based on this strategy, so I'm guessing it works.  

Would have pushed for a longer balloon for pay down and to mitigate risk.I have seen these owner finance deals work out and then some crash and burn.Hopefully before you close the seller is signing certified financial statements that have been independently audited and verified under penalty of perjury.

It is our job to keep the documentation to in case IRS audits you. 

Hi,Helping my father here.....He was a Hard Money Lender (private lender) and is now being audited by the IRS. 

What most of the tricksters don't know is that after funding, loans are audited, your account is open for audit further back, like 6 or 12 months, this is where the lump sum is found.