Ft.556 E Shore Rd$5M3,900 sq. ft.$1,282/sq. ft.5 Auidneck Ct$3.09M3,200 sq. ft.$965/sq. ft.30 Battery Ln$2.53M3,200 sq. ft.$791/sq. ft.597 Beavertail Rd$7.82M5,300 sq. ft.$1,475/sq. ft.541 Seaside Dr$4.2M3,400 sq. ft.$1,235/sq. ft.4 Dewey Ln$4.05M2,700 sq. ft.$1,500/sq. ft.Step 2: Adjusting for SizeSince the planned home at 245 Seaside Dr will be 4,000 sq. ft., I used an estimated price per square foot within the market range:Conservative: $1,200/sq. ft. → $4.8M ARVModerate: $1,350/sq. ft. → $5.4M ARVHigh-End: $1,500/sq. ft. → $6.0M ARVPremium Luxury (based on 4 Dewey Ln & 597 Beavertail Rd): $7.1MSince 245 Seaside Dr is a prime location and waterfront lots in Jamestown have high demand, I conservatively estimate $1,500/sq. ft., leading to an ARV of:4,000 sq. ft. × $1,500/sq. ft. = $6.0M – $7.1MStep 3: Justification of ARV at $7.1MWaterfront Location: High demand for oceanfront properties in Jamestown.Luxury Market Trends: High-end buyers are paying $1,200 – $1,500 per sq. ft. for new construction.Comparable Sales Support: 4 Dewey Ln and 597 Beavertail Rd confirm the $1,500/sq. ft. estimate is realistic.Low Inventory: Waterfront lots in Jamestown are scarce, increasing property value.Your ARV analysis looks pretty solid based on the comps you’ve used.

It all still goes on Schedule E. 

I have decent liquid assets but they would take a huge hit dropping 10-20 percent on a 2 million + loan.  

You can continue using TurboTax if you're willing to learn rental tax rules, as rental income is reported on Schedule E with deductions for mortgage interest, property taxes, insurance, repairs, and depreciation.

There is no benefit for private lenders or HML today to do this strategy as they are completely in the drivers seat being able to dictate terms as liquidity becomes more and more an issue.

This is a great way to build experience and get some quality rental properties under you while keeping your liquidity up to go find additional properties.

It isn't a super neat solution but it is really hard to build without a good amount of liquid capital.

I have no desire to be part of any lawsuit or liquidation event.

If you are not Materially Participating, the loss will be reported on Form 8582 and like be classified as "Unallowed".The ordinary loss from Schedule E cannot offset the Schedule D capital gains. 

I would make the expense codes mimic the Schedule E if using quickbooks.