If you have ever purchased an investment property from a family member (or friend) or structured some sort of profit sharing arrangement I’d love to hear about it.

Figure another $1000 if cash, significantly more if a loan.Subtract the $25,000 rehab.Then subtract the $160k purchase.Looks like $21,000 or so in profit.

As long as I make a profit, I’ll be fine.

You "paid" or "offered" value for the note that is equal to the note so there is no taxable profit in the note. 

Getting a property at a discount, adding value through renovation, getting tenants and showing the bank a "seasoning period" then pulling your money out via refinancing allows you to get back potentially all if not a profit from that deal, and go find another one. 

(THEN, of course, wholesalers who have to buy it EVEN cheaper because they need to fit in their margin in addition to selling it cheap enough for #6 to buy it!!).

One of the properties is actually split with a friend of mine - both our names are on the mortgages and our two families have split the expenses and profits 50/50.  

My personal preference is to look at metrics which take the opportunity cost of capital into account such as internal rate of return (IRR), net present value (NPV), or profitability index (PI).

Even if your income never gets low enough or you don't actively participate, at some point the suspended deductions can be applied to the profits when they occur.

Financials: Purchase Price $112,500.00 Renovations $140,000.00 Total Investment $252,500.00 As A Flip: ARV $300,000.00 Closing Cost 7% Net Income at Sale $279,000.00 Total Profit $ 26,500 ROI 10% Annualized ROI 13% As A Rental: Rent Income Month $2,300.00 Yearly Rental Revenue $27,600.00 Yearly Expenses (35% Exp.