I think setting this balance/threshold also establishes expectations and boundaries for the tenant.

In order to successfully raise capital of this magnitude, the founders must have a track record of success in the specific field of specialization in a size and type the same as the proposed investments.In order to acquire a track record of success it would require that an individual begin as an employee of an established private equity, buyout, or similar company, and advance to a level of responsibility for decision making as to investments.Candidates for these positions are culled from the top graduates of the top 5 MBA programs, or sometimes PhD programs with a degree in a specific tech field related to the endeavor.More attainable to the person without said credentials would be to establish a track record of success in real estate investment and put together a small to medium size syndication with a significant seed investment by the operating partner.

For the sake of the discussion, let's say I was lending $25k and the borrower was paying $1k in origination fees (points).Here is how the transaction went step-by-step:We agreed to initial terms via email.The borrower paid for a real estate attorney to draft up a note with our terms and prepare an open-ended mortgage to establish me in first lien position on the property.Unfortunately, Step 2 took a long time, and the buyer had to go to settlement on the property (via an all cash transaction) before we could get the mortgage in place.About 1 week after closing, the real estate attorney coordinated with the title company to get the mortgage in place.

Fortunately he's on a fixed income that's guaranteed, so he really has no excuse, but establishing those expectations a few years ago I suspect have made all the difference.

And if so are there sales of properties recently with such a coach house as the 3rd unit to establish value ?

I’m not brave enough to really partner with someone as I have tried in the past with construction and no one can see eye to eye even after establishing boundaries and set guidelines.

What I'd say is most important is to establish what's actually covered by the fee though - in the end if both parties are aligned from the onset and you feel the value is there for the services performed, then it could be worth it.

I'm going to try to establish this conclusion and then support it:  a 401k is not safer than real estate investing for the same reason you point out, and ultimately the answer to your question completely depends on YOU :) 1.

Now, I'm back to square one, looking for contractors who aren't total sissies who will be willing to remodel a house in a not-so-nice neighborhood, and do it quick.I'm pretty sure I don't have any legal resource due to caveat emptor and all that, but I would like to end this with a summary of some lessons that I've learned from this: When investing in a property that needs work, make sure that you have a good network of contractors established who can do the work, (or, you can do it yourself) and make sure you understand everything that needs to be done to the property.Real-estate can be a slimy business, with slimy people, especially when dealing with distressed properties, or properties in bad neighborhoods. 

At best it would be a similar return with more effort, but could be useful if you are looking to establish a track record in order to grow to larger deals.