and also, what is the pre-payment penalty on the DSCR loan? 

Now we are dealing with having to file 3 years of returns for Portland, and the penalties and interest are very high.

BUT even then, the contract is valid, it just violated Portland regulations and the owner would owe the tenant the local Relocation Fee (penalty, which is steep). 

If there's a hole, it may be a red flag.b) sensitivity analysis: I examine all the assumptions, and make sure I can live with the worst case scenarios.c) "Stall and see": if they are getting money over multiple years, and there is no penalty for investing later, I would usually wait so I get some real performance data, versus having to look at theoretical pro forma information.d) Recession stress test: I will not invest in anything, until I subject it to recession level stress and see if I can live with the result.

The longer the better, but keep in mind that many of these structures have severe prepayment penalties so using 10 year debt for a 3-year hold creates a problem. 

If you do not report these earnings to the IRS, you can incur IRS penalties as high as $580 – for each worker ($290 for not sending it to the IRS + $290 for not sending it to the contractor)!

Will ask lenders bout prepayment penalties and refinancing options as well.Alex

Check with your CPA if cost seg makes sense before proceedingRISK - If the IRS disallows your cost seg, the risk will be the taxes previously due and any penalties. 

But was able to find rev proc 84-35 which would allow for a waiver of any penalty to file 1065 in this situation at least.

But I am sure they talked about fines and penalties.