To me the downside is lack of control, and transparency (not that they are hiding anything, but you just can't track the numbers like you can with your private portfolio), and possibility to lose it all due to financing and LPs position on debt structure.Just my 2 cents.

This almost always necessitates the NRA file a 1040NR to reclaim the excess withheld, further adding to the compliance structure and cost.A lot of hedge fund managers don't like to have NRAs come into their LPs specifically because they find out about these obligations during tax time and don't like what it does to their compliance bills.A "blocker", i.e. establishing a US C Corp between the NRAs and the US investments, does solve this problem, but again, all factors need to be considered for a holistic approach -- minimization of US tax liability, Canadian tax liability, and compliance fees in both countries.

I suspect the increase in CoC would be large and the decrease in IRR would be small so it would still fool most LPs. 

After Portland liberalized its ADU regulations, it stimulated a boom in ADU projects.

In a real estate syndication it is done via partnership where there are General Partners (GPs) that do all of the work and Limited Partner (LPs) that are passive investors.

Of course, checking with local goverment and obtaining necessary permits is always a must.Hopefully that helps stimulate some more creative thought on how you could take a new SFH and still turn it into an awesome hack.

Not all will show up but it stimulates people to sign for the credit check. 

From the LPs perspective, it comes back to pros and cons, just like talking from the GP/Operator side.Since in-house property management really thrives at scale, when your GP has an in-house management team, it MIGHT create a conflict of interest.  

Sacramento is 9/10 (very good but slightly worse than large CA coastal cities)  Sacramento appreciationGood luck I went to a Brad Sumrok event a few years ago and there was like hundreds of LPs / limited partners and they did a macroeconomic high level view of apartment investing.

One thing about LPs is it is a flow through to your personal name and taxed as personal income.S-Corp and C-Corp are taxed at a corporate level.