You payment is $2,600 plus tax and insurance.

You and your legal, tax and financial advisors should review this transaction in greater detail, especially the PLRs, to ensure you understand the significant risks involved and are structuring the transaction as close as possible to the PLRs to mitigate some of the risks.

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

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.

In California there is $800 franchise tax per LLC per year, which discourages a lot of RE investors from getting an LLC.

Quote from @Erick Pena: A "good" rental property is one that covers all expenses (mortgage, taxes, insurance, maintenance, property management fees, and any other costs) and still leave a surplus (commonly referred to as cash flow).Calculate cash flow as: Cash Flow = Rental Income − Operating Expenses − DebtThere's much more to it, but that's the basic idea.

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

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.

Consult with competent legal counsel to guide you regardless of your choice here.

On property number one, I would cash flow $750 a month after mortgage, taxes, and insurance if I also rent out the unit I live in.