Are you/the owning entity prepared for the tax consequences of a sale?

Originally posted by @Ali Boone:Notes are great, but the biggest bummer about them is you do miss out on a lot of the financial benefit that owning real property gives- equity build, tax benefits, etc.Another is that notes don't hedge you against inflation unless you're actively trading them up.

Real estate investments like this are generally considered a passive activity as opposed to a trade or business (in which case you could deduct these types of expenses). 

The consequences of a mistake can be quite severe.

You control who you market to and as a consequence, who responds to you.

Investors could loose $50,000 - $200,000 (haven't had anyone come in at over 200k yet), but I could loose my house and more...I think that's fair trade :)

If you can trade down with a car and buy used then do it.

I've been investing in SFRs for the past three years, but I'm trading up to start investing in small apartment complexes.

And yes, I am talking about sellers listing their properties at 3-4% cap prices in markets trading at 10-12% caps.

Our clients generally trade up in value in order to increase the number of units and/or cash flow, so trading way up in value is certainly permissible and usually a good strategic move.