Quote from @Nick DiSanza: Most DSCR issues I see don’t start with the lender — they start before the deal is even submitted.The biggest mistake is assuming DSCR is just a rate and leverage decision, when in reality it’s an underwriting and structure decision first.A few examples I see regularly:– Deals modeled off optimistic rent assumptions instead of what an appraiser will actually support – Taxes and insurance estimated too lightly, especially in states where reassessments jump post-purchase – Choosing a DSCR product that doesn’t fit the property type or market nuance – Treating all DSCR lenders as interchangeable when their expense and rent treatment can be very different When DSCR deals stall, it’s usually because the structure didn’t match how that lender underwrites — not because DSCR “doesn’t work.”Curious what others are running into right now.

We have seen others set up a tenant in common (TIC) structure side by side with the GP/LP structure. 

Please review it solely to explain the cash distribution and waterfall provisions, including:• Any preferred return(s), including rate, compounding or non-compounding, and accrual mechanics• Capital account treatment relevant to distributions• Return of capital mechanics• Catch-up provisions, if any• Promote / carried interest structure, if any• Order of distributions on an ongoing basis and upon liquidation• Any differences between operating cash flow distributions and liquidation distributionsInstructions:• Do not summarize the entire agreement• Do not provide legal advice or interpret beyond the text• Quote or cite the specific section numbers and language you rely upon• If the agreement is ambiguous, flag the ambiguity rather than guessing• Present the explanation in plain English, step-by-step, as if explaining to an investorDeliverable:A clear, structured explanation of how cash moves through the LLC, including a numbered waterfall.

Best advice is to act fast and go professional—heat treatment is usually the most effective.

For a <7-day average stay, you’re right that the activity is not automatically passive, and the 100-hour + “no one else worked more” test is commonly used.

.• If you credit one tenant, others may expect the same treatment once word gets around.That said, some landlords do choose to credit the fee after move-in as a goodwill gesture—but only once the tenant is approved, signs the lease, and actually moves in.

The tax treatment depends on whether the $40k was repairs/maintenance (often deductible now on Schedule E) or improvements (generally must be capitalized and depreciated over time), and this applies whether you own it personally or through an LLC. 

Hey BiggerPockets fam!
If you could give one piece of funding advice to someone doing their first flip, what would it be?
Trying to help beginners avoid mistakes and have smoother closings.
Thanks for sharing your ...

Hey Alex, this is a pretty common setup, especially for small multifamily deals, so it makes sense that your partner wants a structure that protects his capital while still giving you upside for doing the work.Most people use some version of the following:1.

For a non-U.S. investor with U.S. rentals, you want a responsive RE-focused CPA who regularly handles nonresident filings, foreign-investor rules like withholding/FIRPTA on sale, FDAP vs ECI, proper rental tax treatment, and U.S. entity + state/local filings.