@Brenda Garcia appear you may be responding like their intimidation tactics are working:(You do need to know the laws better than the tenants!

I just put one in my duplex last fall to make it more marketable AND to solve an issue with grading/appearances (and because I live there). 

@Sandra Youkhana  It appears, you are living through what I lived through.

Too bad as they were outstanding tenants in every way (their unit appeared owner occupied nice, rent always on time, easy to deal with). 2nd was married couple with a trans female and birth female.  

**Basement Water Damage:** The walls in the basement are wet up to 15 inches, and it appears that water is seeping in from the ground.3.

The Registered Agent will record the documents on your behalf so only their name and information appear on the documents.

While it would appear to be a bad move, the tenant in the upgraded apartment may be happier, stay longer, tolerate rent increases and be less trouble.

Now for me, personally, I just put a bit more down to make it 1-1.25 DSCR just so the math on LLC's income appears differently for visual reasons but $300/mo($3600 annually and lowering each consecutive year) is a drop in the bucket for what that property will yield me year over year.

At the surface level, it does appear that you would have to pay capital gains tax on the profit.

But, it does appear that all of the current uses are permitted.