Or, if nobody pay him off for whatever reason, and he is not stopped from foreclosing judicially, he has ownership of a property probably worth many times the amount of his lien.

One of the complications I run into with sales data is often there are transactions that are disqualified sales, or not arms-length transactions, or transfers that otherwise don't make sense.

—-For liabilities generated with the properties themselves, typical liability policies plus an umbrella of a couple million is more than sufficient.....even though I know attorneys and others Love to recommend complicated structures, that they get paid to set up/maintain.

This is complicated, expensive to set up, and as restrictions on who could invest.

@Mitchell RubinsteinIn addition to what Lance mentioned, as you're a CA resident you may have CA nexus complications at the partnership level if you are a manager for the partnership and a CA resident...Make sure to run by your tax CPA/EA.

They have 30 days to respond/pay off the lien and interest.If nobody pays the lien, then you can begin a judicial foreclosure ($1,800k - $2,500k are typical fees when using a lawyer).

As long as they have some privacy, it shouldn't affect their rentability, but it could present some complications when you go to sell it. 

There are some complications under the current rules on how you have to sell your investment in order to make the tax election, but hopefully that will be fixed in the final regulations.Also, a lot of people ask - operating income during the investment is taxable under the normal rules.There can be a lot of complexity for OZ deals, but in the case properties involving a large rehab component, it can be much simpler as long as the structure is in place before you start making purchases.

I don't see how using IRR or any other more complicated metric is better than knowing,  for example,  if I put in $100k, I'm making at $14K on that initial investment every year. 

@Erica Moore Sure- but it's less complicated than you'd think.