In addition to my full time job, I've got 4 kids under 10 at home.

An additional benefit seems to be the ability to pay my kids out of the LLC so that they'd also have some earned income in order to start contributing to their own retirement accounts. 

Phase One is having me move into one of the units (at discounted rent) and have me manage the building from there.Anyway, we have a horrible tenant my parents have chosen to remove in order to both make room for me and remodel the unit. 

Of course, the differential in return needs to be meaningful to compensate for the additional risk of a stake in a flip transaction and the tax filing overhead.  

The end goal is to have a substantial amount of passive income as well as build equity, to have additional security for my family in case something were to ever happen to myself or my job.  

Those payments would be deeply discounted because of the time value of money.That is why I recommend that when you sell or broker a note, sell or broker a partial and keep the last few years of payments for yourself.  

This strategy only works if you truly have the discounts you state.

John, the 2nd would be better off taking a discount on the lien because as Chad mentioned on his post, if the 1st mortgage is the one foreclosing and properly names the second in the foreclosure suit, once the property is sold at the auction any junior liens are dismissed/extinguished as a result of the foreclosure action taken by the first lien holder.

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I want to make sure the tenants get their deposits back in addition to a sum to leave the property in 30 days.