Overall, entity 'sophistication' is over-used and usually causes more problems than it solves, IMO. 

is why would a sophisticated investor buyer pay $1.25 million for a $50K chance in one market but only $625,000 in another.  

Earning more income in Los Angeles is a must, but I really don't know how to do that in the real estate space just starting out.Note investing is appealing to me, I'm not currently sophisticated enough to that yet.

You can probably simplify a lot depending on the sophistication of the private lender.Allen

I'm not a realtor so I imagine there're more sophisticated ways of doing this, but that's about how I do it.

Junior lien holders are usually less sophisticated (friends and family) so it's tough for them to keep borrower on the straight and narrow.2) In a short sale situation the junior lien may pressure senior lien to discount, not that the senior has to but this could be an unpleasant situation.3) Junior liens do prevent a DIL, but I'm not sure as a lender I would accept a DIL under any circumstances, since things like a mechanic's lien can sneak in there.I'm starting to thing there is not a clear cut argument either way.

As a W-2 employee, payroll taxes are automatically deducted from your paycheck and then paid to the government through your employer.

"Most common methods work fine unless one is running sophisticated strategies (with sizable capital) or taking outside capital (with stringent reporting requirements).More often that not, investor expectations will determine your calculation methodology.

Total payroll would be around 20k per month.  

When you do that, you can pay yourself a reasonable salary to satisfy the IRS, then whatever profit left should be distributed which saves you the payroll tax.If you aren't expecting to make lots of money, I would use an LLC, and once you guys make enough, I would elect to be treated as an S-Corp by the IRS.I recommend "Tax Free Wealth" book by Tom Wheelwright.