IE if the ROI is 200% after 2 years and then gets allocated annually, boosting our credit and providing a modest income to 5 people.

You've not allocated anything for capital (roofs, ACs, etc.)

They are trying to shed that off the books.The bank now has say 50 million to allocate to commercial real estate lending for new loans.

It is not tied to a certain property, so we can allocate it how we want each year when we do taxes.  

They will be the project manager and investing their time for 50% of profit; however, they don't have any skin in the game in terms of actual cash.Is it normal for me, as funder, to ask to have a loss allocation written into the document?

@Brad Kirkwood There has been a lot of talk and possibly capital allocation on a commuter train that would run up the Allegheny valley to Lower Burrell/New  Ken which would provide a nice alternative to using 28 to get to Pittsburgh.

You would get the amount allocated to your primary residence tax free and would 1031 the amount allocated to the investment portion. 

The issue there is an allocated release fee on each lot.

This is an asset allocation question.

I am re-allocating out of some value plays into cash flow plays as well.