The language you supplied addresses that where it says “First...”If the sponsor is investing cash in the deal alongside the investor, they would participate in this tier on a pro-rata basis, however.The provision beginning with “Second...” addresses what happens to any remaining distributable cash after the first tier has been satisfied.The only confusing thing to note here is that “members” is not capitalized in the second provision.  

Are they mom and pop in nature, regional, or national (even global)?

And by the way, the best guys are mostly already millionaires and running their own rental portfolios, law of supply and demand, baby.Try to pass costs for maintenance items to tenants with some of the misguided magic-spreadsheet schemes I see here on BP, and you're guaranteed to see the most idiotic rigging attempts to fix problems you could possibly imagine.

Colorado is the only state where all water flows out of the state. the water supply is the mountain range.

Demand goes up, supply goes down, prices increase.Cost of buildingAdd to that the cost of materials and cost of labor (due to a lack of construction workers) increased the cost of building.

I spent 5k in repairs and supplies for a Short term rental in the ADU.I got my return back and there is no mention of these expense anywhere.

This "can" be a problem if you're buying supplies and things on credit cards to fix the houses.

RE has many aspects (finance, negotiations, sales, marketing, dealing with tenants, accounting, technology, raising money, construction and more); I wish more beginners would take this approach.Tasks might entail anything from going to the property and taking pictures, picking up supplies, doing some admin work, marketing, website building/managing, social media, running initial comps, making follow up calls. 

Supply might be meeting current demand and/or buying a home is more attractive. 

The best way to go is to call local building departments, Tax Assessors, county clerks, experienced and successful real estate Agents/brokers, lumber supplying stores, local real estate associations, City councilors, or City Building Departments, Local popular newspapers, and popular cellphone companies.