There are also tax implications.

@Brett RiemensniderYou don't need to provide anything to your tenants tax-wise.

You also don't have to pay state tax on income. 

Then there’s this glorious tax season where you realize how many things you get to deduct that others can’t, while sheltering your income with depreciation, and earning tax free income with appreciation.

Line Item Fee Collected Rents 10% of All Collected Rents New Tenant Search & Onboarding $500 Business Hour Service Calls $80/hour + Materials Cost + Tax After Hour Service Calls $110/hour + Materials Cost + Tax HVAC Cleaning & InspectionGutter CleaningSpring/Fall Exterior CleanupSeasonal Mowing & Weed TrimmingSeasonal Snow PlowingGeneral Contractor Vendor Cost + 10% Oversight Fee

If the permanent financing will allow you to recover most of your initial investment and the fair market rent covers the principal, interest taxes, and insurance with cash left over, you have a BRRRR.

This will also allow you to avoid taxes on the sale.

.$275000 with 25% down, taxes $4080, insurance is 3000 yr and rents is $3800 month, Water $400 mth. 

If you can rent it for $2,000/month, after fees, taxes, and potential maintenance costs, you’d still make a decent passive income.

And must be pretty significant unreported income if it would have caused $45k in state tax liability.You advised your client to wait past the expiration of state statute.