.- Majority in BP are just small RE investors neither have the experience nor appetite to something off beat.If you have done your due-diligence, going to enjoy it, and just in case can absorb uncertainties, GO for it!!!

If no regular companies will take it you may be forced to look to the Excess/Surplus market (Lloyds of London is an example). 

Not cool to have one tenant dependant upon the next for comfort, or one accountable for the others excess energy usage.

Or do I just distribute the 8% preferred return and keep the excess cash flow as retained earnings which would then get distributed at the time of sale five years from now.

An excess liability may be 800 per year or an umbrella may be a few hundred a year and each property added would be a small adjustment. 

Thanks so much for your reply @Alexander Felise So, theoretically, as a beginning investor let's say I run my numbers correctly, purchase a property that is worth purchasing, and then do a cash out refinance after it has appreciated (naturally or forced or both), and, if done correctly, you will essentially just have to continue to pay off the original value of property #1 via your new cash-out refi loan product but get to pocket the excess and use it for future deals.

However, that's a pretty good litmus test for the appetite for STR in the area.

Any excess (it will be less than the $400K you might think) will be taxed at the long term capital gains rate. 

Seems excessive for that category.

I guess it all depends on one's goals, risk appetite and aggressiveness.