As long as the property value is legitimately going down, or going up slower than it would otherwise, it seems like it would be a punishment to not be able to write off $13k per year, since there is a -$13k per year drag on the property value. 

Additionally, striking the right balance between protecting property owners and allowing for legitimate wholesaling activities poses a complex challenge for regulators.Conclusion:As the real estate wholesaling industry continues to evolve, state legislatures and regulators are actively working to establish a regulatory framework that safeguards the interests of all parties involved.

And please know, I am asking legitimately with interest in the answer, not confrontationally as many people like to be on these forums. 

Hi Bill,You are bringing some good points, so let me clarify:This is not an equity stripping ploy like a "friendly lien between parties" far from it, it is in fact a legitimate method to capitalize an entity that has been upheld by courts for years.If for instance you and I go into business together and decide to set up an LLC as the entity of choice that will flow through to each of us in a K1.

On the surface they sound legitimate, but I am wondering if they aren't really sabotage.

You're providing a legitimate good/service.Maybe consult with an attorney over this one. 

That said, I also fix anything that I feel is legitimate asap. 

Tell him you can't  give him a break on rent but you can reimburse him for legitimate repairs once you have the receipts.

And the operating agreement, even though including the term "LLC" in name, would still serve as a legitimate agreement?

There are legitimate reasons for reviving an old thread.