Passive loss strategies such as REPS and the STR loophole are known audit triggers so your friend would want to do this the right way. 

Having gone though an audit from the IRS myself, I cannot tell you enough times how happy I was that I had one.

Im involved personally in other similar syndications and they are doing well with positive monthly returns and real audited financials that show year over year gains.

I have never seen any financial statements or documents or 3rd party audits etc.  

How do you know if they're doing fine if they did not issue a K-1 or provide audited financials. 

You’re ahead of the game at 20, so channel that boredom into skill stacking and deal flow: tighten your buy box, underwrite 5 to 10 deals a day, and post your criteria to your network so leads come to you; master one financing path (DSCR, HELOC, or private money) and prep docs now; optimize your current duplex with a simple revenue bump test and expense audit; build your “core four” team in your next target market and do virtual tours weekly; line up a small BRRR-style playbook so when your savings hit your target you can move fast—your job now is reps, relationships, and readiness so next summer you’re executing, not learning.

And what records do you provide your accountant in case there's an audit? 

Splitting it across years or calling it a loan tends to create more paperwork and audit risk than it saves.

@Tiffany Situ - I'll put it this way...if you're ever audited, what the IRS cares about is that the property was genuinely available for rent.

Insist on a year-end tax package, clear classification of reimbursements vs. income, audit-cooperation language in the contract, and guaranteed data-export on termination.