I'm also considering the idea of a fix and flip for longer times per project but a nice cash injection YOY to use elsewhere and prove to banks I'm not dumb and I know what I'm doing.

Inject more capital, watch the return diminish and hold for the rest of my life to get it back?

Let’s call a duck a duck.Ironically/unintentionally, they have/are injecting resources in these low-income neighborhoods.

UC campus injects a lot of money into the area and being the newest UC campus, it is still in more in a growing phase than the long established campuses.good luck About that house as a buy and hold investment--I could have done that, and it would have worked out okay.

@Shlomo Rozen I've seen this type of "partnership" work, but most often do an ugly meltdown.Nobody wants to spend the time & effort to properly establish a formal partnership, with an LLC, Operating Agreement, etc.So, when negative cashflow requires the partners to inject their own capital - there's finger-pointing and a meltdown.Proceed with MAX caution...

If there ever is a decision to be made with a property you can have infighting with capital call injections, placing debt for loan or refi, when to sell, etc.

I think @Brian G. and @Jaycee Greene hit it on the head: an event occurring/debt resetting.When the debt forcefully resets on some of these assets, valuations drop if the submarket cap rate has expanded and/or if the operator can not show a good t-3, t-6 etc due to economic vacancy and rising opex (insurance, r&m etc).If the operator can't inject equity to cover the difference, then trouble arises.

Seems they could recharacterize their $2.9M from a loan to a capital injection to meet lender requirements, but instead they are 'asking' (threatening complete loss of your investment) for you to repay them. 

Great question—and it’s one that trips up a lot of people in the fix-and-flip space.To clarify: the $40k from your personal HELOC isn’t considered income or an expense on its own—it’s simply an owner contribution (a capital injection), not a business deduction.

However, the benefits of this type of transaction can still be safely realized with proper structuring and a good amount of equity injection.