For example, if the property you are buying is a development property, like a small house with a large lot in a developing area, then a small negative cash flow could be okay if you can carry it.

Finally, The rent control discourages further development, limiting supply which results in higher rents.So rents go up, but the rent control advocates are too uneducated on the economics of the rent control policy to see their role in the rent increase.Another consequence of rent control is no value in keeping the property as nice.

Over time, we have developed systems to handle these situations as effectively as possible.

Essentially, I own 1% of a piece of land there that RAD plans on developing over the next few years.

That is just not realistic in this current market.So in my opinion it's important to expose yourself to a large number of deals, so you can develop an intuitive sense of what's reasonable and what's not (and quickly discard the ones that aren't).And it's true that there is no way to 100% protect from fraud (and not just in passive real estate investments but even in public stocks etc.).

I studied RE development and investment for my MBA, I am the building inspector for the town where I live and I worked as a contractor before switching to only working on my own deals.

Think fix-and-flip properties or land development projects—things that don’t fit the cookie-cutter mold banks prefer.

More like  2X to 5X the cash out.. these are done with builder developers on their deals So put out 300k get 300k back in profit plus the interest rate. most small builders/ developers need to have a equity partner so you just do both you lend the money and are the equity partner.. pretty clean..

(FYI - this was an SB9 "two unit development, not an SB9 lot split). 

I have a few lots in New Orleans and am looking to run  profitability analysis of sfr 3/2 development v. one zoned as duplex.