It is important to know your local laws!

My brother in law is also looking to get back in - although he and I tend to differ on the home condition and tenant interaction so I'm not sure how much use my help will be for him.I don't expect anything from these people.

By law, Officers and Directors, employees and volunteers may not be held personally liable for their actions except for intentional acts.

Check your own state law terms. 

With that you will have to register the fund and comply with laws and regulations including who can be an investor (accredited investors or friends and family) and who can not.

Since the person is local, it likely is more accurate to your state laws, etc.While you're likely in competition with REIA members, they could also be your end buyers.

There are laws and reg's in NY that most states do not have.

Jason lots of fraud and criminals out there trying to make a quick buck.You could be sucked in and chosen "guilty by association" in the deal.We have a saying in the business.This deal has "too much hair on it" and you need to walk away.Many of these techniques with short sales squeaked by 3 or 4 years ago before bank guidelines were in place.Now with systems you cannot get away with anything if you wanted to.Before there were shades of grey that were closed out.I would see buyers write up a bill of sale and pay the seller 4,000 for JUNK for personal property.At the time certain things didn't have to be disclosed.Short sales made up only about 1 percent of loans when the market just started turning.So anyone looking at short sale techniques make sure they work TODAY and not from years ago.You will pay dearly for using old techniques that can get you in trouble that are not allowed today.You have to adapt and structure deals to stay in compliance with the ever changing laws.

How does he 86 tax law effect you?

Just don't try to deduct mileage to inspect that property ;) -Steven the Tax GuyYour Guide to IRS laws, rules and regulations.