"To the extent (1) the partner who holds an ISPI contributes “invested capital” (which is generally money or otherproperty) to the partnership, and (2) such partner’s invested capital is a qualified capital interest(which generally requires that (a) the partnership allocations to the invested capital be made inthe same manner as allocations to other capital interests held by partners who do not hold an ISPIand (b) the allocations to these non-ISPI holders are significant), income attributable to theinvested capital would not be recharacterized."" 

you nailed it Gary is dead and deader and dying you get what U pay for plus you will never collect the rent in any consistent manner who wants to live there given a choice if they are good rent payers.I had two homes in Detroit that tenants kept beating to crap.. got code enforcement etc..

Fix what needs to be fixed in a timely manner, but no more discounts. 

It's simply not sustainable.

I realize some markets are definitely growing and might be able to sustain this for a while.

But you aren’t helping to educate folks when you don’t make your thinking fully visible and communicate in non-constructive manners.

So it sounds like the main reason we shouldn't refinance in this manner is that we could lose the LLC protection.

I am trying to scale up smart manner overtime .

It's just not realistic or sustainable over time for those numbers.If you buy a 5 cap for instance on the sellers pro-forma comparing to decades of data you are buying really a 4 cap.

It's pretty risky to do unless you can find a niche with enough demand to sustain a business.