Achieving (more importantly justifying) Qualified Real Estate Professional status is doable but complex and you’re going to need your own property in order to justify having annually spending that amount of hours (it is highly unlikely that any QREP audit would hold water based on you (or non W2/1099 income spouse) allocating the required hours on someone else’s passive deal).

You also should have audited financials done (which will cost $10-$15k so a $450k fund makes little sense)Can you get away with not doing this, yes but if it goes bad and someone gets upset and files with the state regulator you will basically go bankrupt with the fines (and potential prison time).Lastly you have to file a form d with the sec BEFORE raising money and you also have to file each time you have a new investor in that state.My recommendation is get an attorney like yesterday.  

The IRS will appreciate it when they audit you.  

As I stated in the post above I have my B.A. in Accounting and Finance, CPA eligible, Took audit and got a 70.... twice. now the option is to become a real estate agent to become a better investor because I would be working in the field etc. or focus all my time and energy passing the exams and working with a CPA firm. 

For example:- building 1: Me, Partner 1, Partner 2- building 2: Me, Partner 2, Partner 3- building 3: Me, Partner 2, Partner 4etc.By keeping everything completely separate, audit trails can easily be set up and the integredy of the Accounts are maintained.Each Building Partner can have read only access to the Accounts so they can monitor it for excessive expenses, fraud, etc.In fact, this helps build confidence in me as the manager for the Buildings amoung all 10 of my Partners.Is it difficult?

The developer I worked for had several properties fall into default based on the annual compliance reviews which could include maintaining DCR, rental occupancy levels, reserves, including auditing your own balance sheets, as these are just a few areas they hit on (obviously depending on loan) assuming apts.

There are lots of people who have done all kinds of things and been fine, it's just because they haven't been caught or audited yet.Seek the guidance of a tax professional before doing anything (or at least educate yourself as best you can).  

It will be a tough explanation for a field agent if ever audited. 

Put clause you will have quarterly audit.

It still has not happened, and very, very few of the many thousands of clients we have established have been audited.