They then found out the basement was rental that all they had to do was paint it red and they had another rental. 

Second, the neighbors accusations mean little to me except as a red flag to look into something.

I'm going to go with the other posters who bring up the red flags about them and assume they may not be legit.

I don't really want to, but the rents in the area are pretty low, and its not cost effective for me at this point.

Beyond that, I remember being a hotel guest when I spilt a bottle of red wine on the room's bedding and the hotel didn't bat an eye.

To get the full effect of how I first saw it, I'm going to have to ask you to imagine a raccoon sitting up on top of the bed.If it were mine I would curb appeal this place to make it desirable to a new buyer, and just leave some meat on the bone so they say, as far as the interior and the upgrades.

Our backgrounds include owning and operating properties under Choice, Hilton, Sonesta, and Red Roof Inn brands.This will be the second Marriott-branded hotel in Smithfield, with the other being an older Fairfield Inn.

For some reason to him this is a red flag to the IRS.

I would add that the current Utah investment market is red hot and it is hard to find good rental units for a decent price.  

If I remember correctly, East Coast Tax Auction LLC and Red Rock Capital were two of the high volume bidders.