As an investor it does add some costs and it does require you to either do more as a self manager or ensure you have a property manager that is one top of it. 

There are more buyers out there than there are deals in just about every part of the country.Stick to the MAO formula and it will ensure you have a good deal.MAO = ARV(.70) - RE - WP 

The will often end up using the address of the property to ensure they can keep things straight while also protecting their personal name in the process...........................................................................

I'd like to create a contract and/or entity that will allow us to:define the equity split ensure my original funds are returned upon sale or refinancehold funds for capex and repairsdistribute positive cash flow on an annual basisdecide buyout clause in advanceWhere should we start on making this happen?

* What do you do to ensure that the tenant is responsible for security deposit disputes since that is the largest reason for owner lawsuits* How familiar are you with the newly changed laws that can affect you the owner if they are not used correctly?.

My guess is the PM is holding the funds to ensure all expenses are paid in the event the tenant further defaults and they have to cover utilities, etc. 

Ideally you should discuss it with your tax accountant to ensure you receive proper guidance. 

I just found the site and am trying to gain some knowledge and experience to help ensure my success with my properties 

I suspect we would have all ended up there anyway, so some of the irony is the non-payment of rent just gave me a faster way to get there and ensure they're out around the end of the month. 

It is also likely illegal, but I don't think anyone will get charged anytime soon (none that I know of yet) - as prosecutors are too busy putting dope smokers in jail, rather than seeking to ensure our system of money and lending are sound.