For example, ”Section B3-3.2.2, Documentation Requirements for a Business” in the selling guide includes the following:“Borrower’s Proportionate Share of Income or LossThe borrower’s proportionate share of income or loss is based on the borrower’s partnership percentage of Ending Capital in the business as shown on IRS Form 1065, Schedule K-1.The lender can only consider the borrower’s proportionate share of the business income or loss after making the adjustments to the business cash flow analysis discussed below...” 

So rehab aside, that's the reason most of us only lend a percentage of current appraised value.

If so, will we only be able to deduct the losses based on their percentage of interest in the LLC (i.e if the each have 45% ownership than we can only take 45% of the passive losses against each or our W2 incomes)? 

I don't want to waste their time because I know that typically there is a small percentage chance on the deal actually working out, but I don't know how else to accurately estimate renovation costs.I have looked at the rehab estimator tool on BP and try to ballpark it but ultimately I know that I will not know everything, and wouldn't want to botch my first deal off of not accurately planning for reno costs.Would appreciate any input - thanks!

It’s a low percentage of people entering real estate investing that become successful at it for the long term.

Its called percentage rent and is typically a percentage of gross sales and or a percentage of gross sales over a base amount.

Understand both roles and if you feel your role is more intensive or carries more risk then of course you have the right to negotiate for a higher percentage.

obviously giving up a huge percentage of my profits is the main issue , the other is that it’s not really necessary if your local to your investments.

Also, if the wood is burnt through more than a certain percentage, the city/county will condemn the building and not allow it to be rebuilt. 

The amount you receive would be based on a percentage of the equity you have in it.