Buying now and selling in 4 years, you will probably have to take a loss on the duplex if that is your strategy.

Here're additional guiding posts for you and food for thought: https://www.biggerpockets.com/member-blogs/10850/87253-should-i-scale-my-investment-from-single-family-homes-to-multifamilyhttps://www.biggerpockets.com/member-blogs/10850/86621-six-steps-approach-to-getting-started-in-real-estate https://www.biggerpockets.com/member-blogs/10850/85836-should-i-buy-a-turn-key-property-or-invest-in-a-syndication

Or can we just distribute the profits and losses to our returns via a schedule E without the partnership returns?

Or can we just distribute the profits and losses to our returns via a schedule E without the partnership returns?

Make sure your deductible is affordable should you have a loss. 4.

Basically, you need to budget in for a month of loss of rent.

With that math your profit is $140k, again less than you had in equity with the old house ($790k-$525k-$125k=$140k).It looks to me you did well with selling your first house, good with the second house, but still an overall net loss to wealth after all is said and done.

I believe it tends to give me a slightly lower return, because the sponsor is going to be more careful, and if there is a severe downturn will prevent me from taking catastrophic losses.

All costs for the home are solely related to profit...or potentially loss, but only if you sell the house. 

Agree with Adam, and that fee assumes clean and reconciled financials are provided (trial balance, profit & loss, balance sheet, and general ledger in Excel format).Partnerships are anything but simple now.