Background information is that my wife and I have a high w2 income and also started an llc to mange a short term rental that we own.

It’s been an exhilarating journey, and one aspect I’ve found particularly fascinating is the critical role of property management in optimizing investment returns.

Simply, a percentage of the profits; so only AFTER the investors get their investment back + a “preferred” return of usually 6-8% annually.Here is how our equity (as opposed to our debt/loan/notes) syndications are set upwe as syndicators get a either a 3% broker fee or 3% acquisition fee at purchasewe get a management fee competitive with outside managementwe get 10% of gross rents as ASSET management feeonce investment is liquidated we receive 15% of proceeds ABOVE or AFTER investors receive their capital returned plus 10% annual calculated income including any distributions of earnings. 

As with all mentorships, it is good to come into the space with a draft of high level goals and self-awareness.

Many investors from California, are choosing to invest in the midwest because of the yearly returns making more sense in these lower priced markets.

In both cases the renters have provided me bank information showing they made the payment and it was not returned.

HI Kev, we helped a lot of luxury STR investors this year utilize the accelerated deprecation tax incentive, I would actually suggest checking out the bigger pockets featured tax preparer section and sine it's likely a considerable reduction definitely not try and do it yourself..the investment in high quality reliable tax advice is essential to any investor tool kit. 

Are you a mom and pop landlord whose most likely risk is a premises liability claim likely covered by insurance or a small claims suit for return of a security deposit?

The rate will be high though 

Also remember even with a high amount of financing, the lender will want to see you have reserves to cover the project in case it goes over budget.