Appears you skipped over a "step" in your post though, as it seems you're recommending investors DIY manage to learn the ropes, so they can better vett a PMC.We don't disagree with this concept, as many of our clients we work best with, have some DIY management experience before they hired us.

"Rich Dad Poor Dad" taught me the concept, and "Set for Life" taught me how it was possible.

I’m glad you asked the question tho, it is an interesting concept.

For those unfamiliar with the concept of a preferred return - A preferred return, while not present in every deal structure, is a common return hurdle and deal element that provides investors of a certain class with a preferred position in the order of cash flow that is described in the operating agreement for a project.

@Peter EberhardtThere is nothing wrong with investing in your "back yard" for all your reasons and more.First, you do realize that the "traditional" concept of real estate investing was to just rent out the property to at least cover your expenses? 

The goal would be to invest on the side for a bit while i ‘earn my stripes’ and gains proof of concept.

For example, a 1600 sqft house that has two living rooms...my immediate thought was "why not break down that wall and create an open concept living area or convert the second living space into another bedroom?" 

@Steve Morris Thats the whole concept of wholesaling bud.

I host a LOT of honeymooners and anniversary celebrations, etc. so while I don't know for sure, odds suggest there have been conceptions at my cabins!  

At that point you're going to need to pay rent to the investor which basically kills the entire concept of a house hack.In a city like Boston, notwithstanding COVID, you can even house hack a condo.