Was I correct in my statement?"...

Both answers are correct.

There are no foremen, no building permits and the illegals do everything wrong that can be done wrong.So, after wasting about $700,000 on bad work a building inspector catches them and shuts the project down for about 9 months and makes them pull out every new window in every unit and replace them with the correct windows. 

And this doesn't even hit on the dealing with contractors side, which need daily oversight if you want things done correctly.  

I'm going off the understanding that you still need to spend 500+ hours in the business to achieve material participation (please correct me if I'm wrong). 

Depending on the specific area, you’re correct in that cash flow is more likely than appreciation.

Asking in the correct forum will get a better response.Read the RULES!

Also, $200,000 of one of my investments has never shown up on the K-1, and no one answers my emails or phone calls to correct it. 

My attorney that handles SEC registration told me something along the lines of $1.5-2M as a minimum if I remember correctly.

True although the fires this year just adds to the reasons to leave California (excessive taxation and regulation, overbearing political correctness, downtowns littered with feces, etc.).