Even then I see the potential for the family friend (friends in business are not always beneficial arrangements, so take with caution) to add value well in excess of $2000.

I am young with a good job and not a lot of excess money to throw around.

Plus the cost of going really big to CYA could be in excess of the cost to simply have an LLC.2.

With the recent crash, it was typical for many of the whiners (people now currently losing their homes cuz they weren't qualified to begin with), to do the following:1) Lie about income, enabled by NINA, Stated Income and Assets, which was not an invitation to LIE, but to avoid excessive paperwork and to save time, what a joke,2) Lie about occupancy, stating they were owner occupants when they had no intention of occupying the home,3) Bill already mentioned, a smoke-screen of actual debts,and the list goes on and on...just agreeing with Bill, when does it stop?

Equity amounts do not allow for deficiency judgments and may place the borrower in a position to make calims if excess amounts are receuived from any foreclosure or sale.

The market I am going after is being with limited time, excess money, and/or someone who just does not have experience with this industry.

Chances of actually ending up in Court - he has to file a lawsuit to perfect his lien - are slim to none as he will incur legal expenses in excess of his claim. 

@Jay Hinrichs - Alas, the people who already tried to buy it tried both of our local community banks and neither was willing to extend a mortgage due to the excess of kitchens.But I do have one thing that the previous potential-buyers might have lacked.

California charges a minimum tax of $800 a year per LLC, and more if you have gross receipts in excess of $250k.

Do many get a conventional 30 year loan and pay it every month with the excess rent money?