Lessons by the way that I learned the very hard way.Know your market and rents; too many PM's are content to get less than market rents since they believe they will be quicker to rent and the percentage difference between a $500 rental and a $600 rental is pretty small to them and not worth the effort.

Your IRR will most definitely be impacted unless the borrower agrees to pay extension fees or increase their exit fee, but at some point there won't be enough profit in the deal to pay out the promised return.

I was told that even though my payments were $0 per month because of income based repayment, they needed to be deferred instead otherwise they would consider my payments to be a percentage of the total loan per month.  

Enough NPNs don't pay out that people must have a rule of thumb regarding when to walk away - what are your thoughts? 

If you want to make money on the front end and back end it is much more complex than a simple percentage and differs property to property.If you are still feeling an urge to buy something for investment purposes, follow the Amish.

Do i take a percentage of what they make when they flip a house?

The percentage of the income derived from debt-financing is taxed and you get to use the same percentage of normal write-offs like depreciation, interest payments on the note, etc. to reduce the tax amount.  

You'd do better to loan your money to a rehabber at 12% and forget the worries of being a landlord.Now you could increase your percentage return by leveraging the property, however your debt service with eat into your cash flow.

During that same amount of time, you could've invested $5,000 into a software business and scaled it up to $10k monthly recurring revenue or $100k a year in less than 6 months (very hypothetical, but you get the point).Sure, you can get higher cash on cash return percentages for larger size deals, but it still takes so much more time to get a return (since your investment dollar amount also grows in proportion)....I was really interested in learning more about investing in multi family deals, until I came to this realization.

Add in rehab 9000, at a 50/50 split she is in at 28k with a 10k payout and you make 10k without any of your own money.