I made some elections about grouping by not grouping as I expanded and didn't understand the consequences (making material participation easier/when passive losses can be harvested/ease of filing) of that at the time.Also random question but do you have a sister Nicole?

@Bill HamptonNot a cpaBut you should have a profit and loss statement that shows all your profits and losses.

Be sure you and your friend are receiving annual forms 1098 associated with both loans and that you discuss with your respective tax advisors.You will purchase hazard insurance in your name, listing the underlying lienholder as 1st loss payee and your friend as 2nd loss payee.When structuring a wrap, it's best for the wrap term to be longer than the term for the underlying loan and of course the monthly P&I payment to be higher. 

And this is something I have been contemplating a lot during the last 2 years.You will be shocked to know this is coming out of my mouth.The whole passive income model all you/us real estate investors are so obsessively promoting...

You will also need knowledge of the game and the areas you choose to lend in, not knowing your areas or having someone on your team who does could spell a loss.

West Allis is particular, which was one of our hottest markets last year.Most people misunderstand the consequences.

Cut my teeth on some SFR/ small multi deals in Florida over the last 6 years.

I'll be in town last week of April into May, let me know if you are interested in networking & let's SQUAD UP!

Where the parties to a venture join together capital or services with the intent of conducting a business or enterprise and of sharing the profits and losses from the venture, a partnership (or other business entity) is created.

Jeff,I would suggest another questions/request for info to add to your due-diligence:    "have there been any claims reported to you, submitted to the Insurance carrier, or that you are aware of, during the past 5 years"I would also suggest that you request that they get the "Loss Runs" (report of claims) for the past 5 years from the current owner.