cloa...Note should include a provision similar to the following:FOR VALUE RECEIVED, I, [Borrower name] (hereinafter known as “Borrower”), promise to pay to the order of [Trustee/trust, payment address] (hereinafter known as “Lender”) the sum of Fifty-Two Thousand and 00/100 Dollars ($52,000.00), with interest from the date hereof until paid at the rate of Six percent (6%) per annum on the unpaid balance, payable as follows: Commencing on April 1, 2024, and continuing on the 1st day of each and every month thereafter principal and interest payments of $577.31, with the entire remaining unpaid balance of principal and interest, if not sooner paid, being due and payable in full on or before March 1, 2034 (the "maturity date").Record a first priority security instrument (mortgage or deed of trust).

Their capital gain would be reduced to $500,000, and after the same $250,000 exemption, they would only owe taxes on a $250,000 gain—resulting in a significantly lower tax bill of roughly $55,000.This discrepancy effectively punishes long-term homeowners who have remained in their properties, disproportionately affecting those who may now find their homes unsuitable due to aging, changing lifestyle needs, or financial strain.The capital gains tax exemption of $250,000 per person ($500,000 for married couples) has remained unchanged since 1997.

@Benny Dadlani Large student housing complexes rent by the bedroom, but that's an entirely different model, unsuitable for single-family home investors IMO.

OR am I thinking about this wrong and are there other instruments or assets I should be looking at to get exposure to real estate more passively?

., They will be instrumental to your business. 

Over the past two years, this network has been instrumental in shaping my real estate journey.This is my first post in the BP forums, though I’ve been an active podcast listener since discovering real estate in the summer of 2022.

The other technique Ken is talking about is doing a wrap or in CA you have a really cool debt instrument called a All inclusive Deed of trust..

DOS or more commonly known as Event of default.Alienation of title is an event of default in most all debt instruments not usually located in the Note its in the mortgage  deed of trust etc.And along with other Events of Default  IE non payment of Insurance or tax's or waste these all give the lender the right to Accelerate the note but not the obligation..

Eric,, I think why people go for the fund model is the idea that they are spreading their money into multiple notes being held by the company.. while in theory this is great but as you noted you don't really have any security compared to being the beneficiary of the debt instrument IE debt is in your name. 

Because all these things for default are in the contract and it's not a default and foreclosure on a mortgage, it's on a contract FOR a deed, not a mortgage instrument itself.