I recommend keeping it simple and sticking with the lease (and let the PM handle it...don't dedicate mind share to these kinds of things). 

DO NOT set up an LLC and operating agreement on your own.

He has barely any operating capital.

Is that something you want as an employer- 401ks are generally more $$ to implement and maintain or just do an personal Ira just for yourself or do something in between like a SEP or SIMPLE.

I could see this working if you tried it this way:-buy a very distressed property that somehow still qualifies as "livable"-perform a live-in-flip style operation, minus the flip at the end-do a cash out refi based on the higher value after renovationYou'll have to make sure your cost of renovations are much lower than the equity built.

So Id spend my time worrying about things that are much more likely to happen, like needing to replace a roof, than worrying about things that are unlikely to happen.And for those that survived the most recent housing collapse...the solution to surviving it was rather quite simple....dont sell during a downturn.

If it is a note and not the fund, is it performing or non-performingIf it is the fund then you need to read the operating agreement and any private placement memorandum etc about the risks etcHave you asked them for referrals ?

There does not appear to be room for reduction in operating expenses.I am doing my own due diligence but would also like feedback from others in the local area as to what they think of the location, the property and prospects continued growth in the area and for increasing rents.

There does not appear to be room for reduction in operating expenses.I am doing my own due diligence but would also like feedback from others in the local area as to what they think of the location, the property and prospects continued growth in the area and for increasing rents.

Always Do your own “due diligence” People/companies should give you access to their operations and check the references etc.