There is the concept (a very successful one) of inventory turn over, depreciation begins to wear out around 7 to 10 years, your assets have aged, hopefully appreciated and you sell and move on to homes that meet your requirements.

I have done 3 real estate flips and have recently purchased a lot for new construction so am basically a newbie but do have a couple successful deals under my belt

If your 1065 is done properly, the nature of the passive rental income will remain the same - no self employment tax.The concept of whether it's better to run it through an LLC vs keeping it in your own name is a topic that has been batted back and forth here on BP and elsewhere with no real conclusion.  

Hey @Ards Aram it might be ab it different bu the "concepts" are the same. :) 

The lack of basic legal knowledge and the ramifications of investor's in the unknown is par for the course. 

Learning from some of the greats like Elon Musk, Tai Lopez, Will Durant, and Warren Buffet I hope to bring some of the concepts into investing and apply them to real estate with your help.

. :)  It's basically a full rehab.  

(so time changes motivation for sure) he basically took what he owed, we decided we could profit , got it under contract posted it on my local REI forum at 11pm the next morning had about 3 potential buyers, 1 even sent a contract!

@Jarred Sleeth Here's a simplified model to show the concept.

As the others mentioned, you have zero "equity in the house", but your note has a ton of equity (basically the FMV minus your Unpaid Principal Balance).Your question doesn't make a ton of sense because it's not clear what you really want to know.