@Gary Corban I would definitely do that as it helps to illustrate how "new" all the work that you did really is. 

@Bill Brandt - I know you are trying to illustrate a point BUT I’d challenge you to find a SFH in San Jose for $500K right now.

I still think more sponsors should provide a sensitivity analysis table for Exit Cap and Exit NOI that illustrates the range of IRR on a given deal.

Intentionally blacking out enough information so this snip is compliant with both BP rules and federal regulations, for educational/illustrative purposes only, not an advertisement and I'm not licensed in your state anyways:You can see the PMI that scenario would be 0.19%, but the bumped rate for the "no PMI!"

There would be no depreciation recapture, because the building is sold for $75k which is equal to its current ("adjusted") tax basis.This is a rare scenario, but it does illustrate that land appreciation can have interesting tax consequences.

(you need to think whats fair to both guys and you don't want to give everything away either).Now for your % of sales profits, the sales price is directly related to:market conditions (uncontrollable) = RISK,Property management results (controllable by the property manager) = RISK to you because YOU are not the manager.It seems logical (to me) without any other information though, that 50% / 50% would be fair here.As far as LLC control regarding decisions 50% / 50% with some method to break a tie vote if that ever happened.There are a lot of other things that come into play in this, and it's best to have an attorney draft up your agreement and walk you through all of the decisions that need to made on this.That's just a quick off the cuff discussion, an illustration of what could be possible, (you really need to figure this out for yourself, and with an attorney, because this is BIG MONEY over time, and also talk to your CPA because the decisions you make could have adverse tax consequences for both of you if your not careful).Good Luck!

The $1M property producing $120K income would illustrate a 12% cap rate, not a 12% CoC.

Thanks for illustrating the vision of stabilizabtion, helps me bucket steps along the way against the refi period. 

Is this example absurd enough to illustrate the issue I have with your reasoning? 

Add some 0s to the end of these numbers and you may be able to see how being a real estate professional is beneficial.Additionally, if you have a cost segregation study you may be able to categorize some of the $100 purchase price to shorter life assets resulting in greater tax losses in the earlier years.This example is illustrative so speak to your tax professional to understand the application to your specific situation.