That being said, anything can happen, but if you run your numbers accordingly, make sure that your contractor is trusted and do all the other stuff you'll be a little more protected than the next person flipping that does not do this type of calculation. 

Quote from @Wesley Peixoto: Quote from @Henry Clark: What type of businesses did you do before.  

What made you interested in investing in this type of deal?

These types of agreements can get a little in-depth, but that is what you want for your protection and that other partner.

It also requires different reporting of that separate interest expense on the K-1 each year so the partners know they have the obligation of tracing that interest expense to however the partner used the distributed proceeds.I typed all this up and realized Mr Brooks has left the building and posted this 6 months ago, but hopefully someone else will find this useful!

From your experience, it sounds like wholesalers who are selling a contract they have, conduct and provide some type of inspection? 

Also depreciation is a type of "loan".

Quote from @Gregory Chadwell: Quote from @Travis Biziorek: For 2025, my main goal is to stack up cash—ideally $500k or more.

Second, for you as a taxpayer you need to evaluate if your tax situation (e.g. property type, tax profile, material participation, etc.) will allow you to leverage additional losses generate from cost seg to optimize your taxes. 

However, a few things you could do: You could talk with them & learn more of their story to figure out why their credit score is low as well as the type of people they are.