This would affect the LLC payout but not the Fund investor, assuming the note is sold for more than the underlying loan of course. 

One mistake or big unexpected expense could ruin you if you only have one or two rentals that are not cash flowing.That said, especially in the current environment, if you are coming from a very strong financial position then there may be times where it may fit your goals to invest in a highly appreciating area with no or negative cash flow.

Hi Max, it all depends on how much liquid cash you have of course. 

It doesn't mean that every property will fit that rule of thumb. 

Some examples of properties with high asset reclassification include medical clinics and hospitals with technical machinery and labs, grocery stores with machinery, shopping centers with rainwater drainage systems and large parking areas, industrial manufacturing facilities with advanced equipment, apartment buildings in suburban areas with swimming pools, golf courses, tennis courts and large parking areas for tenants.Here’s a list of the average amount of assets that can be reclassified into shorter asset life classes based upon the type of property.

I may have more strict requirements for my operations today but just means I need to look around more for a market that fits my current position. 

Of course, in hindsight with what the market has done, I wish I'd gone full steam ahead, but in the moment I was playing it cautious.I'm also looking for income to quit my W2. 

@Matt Devincenzo posted while I was posting and of course adds good points.

@Joy McQueary of course I am partial to the KC metro.

Of course it's possible.