I think the correct treatment is for them to report the interest on their personal return if the IRS gets really nit-picky, but I don't forsee it being an issue since the amount is relatively small.

You could try ozone treatment first.

Lenders are still unfortunately tend to be very conservative on the rent-by-room (SRO) type arrangements still - its an area that really could use some better understanding out there but just be careful with expectations because a lot of the treatment of these properties (even if nothing like a old-fashioned "boarding house") can be tough

Many that I've talked to are now working their own acquisition strategies using call centers, etc. to take cold and warm lists to hotter and then focusing more time speaking directly with potential motivated sellers from those hot lists, rather than using a wholesaler (or any other middle man) to source deals.

The economy is thriving in several areas -- pharmaceutical, medical, IT, Distribution centers, manufacturing, government defense, sports, convention center -- a wide variety, so we aren't depending on only one type of industry. 

Ask your accountant to read Regs 1.469 and CCA Memo 202151005.You can have Nonpassive Schedule Es under certain circumstances but it appears he is listing it as passive, therefore creating suspended losses.Here is a previous thread: https://www.biggerpockets.com/forums/530/topics/1056436-clearing-up-confusion-on-tax-treatment-of-short-term-rentals

There's a meetup every 2nd Tuesday of the month at Panera bread in woodland hills at the new shopping center the village.

Tesla and the AI data center investments here there are more high paying jobs that are driving up home prices and rents. 

The constricted building, tech and manufacturing job growth with the Tesla factory and data centers, will drive demand, appreciation, and pricing up in the next few years.

If you're willing to bend your timeline a little to give yourself the best shot at qualifying for 1031 exchanges and being super tax efficient with your properties, you could try doing the following: - Hold each successive property for at least 12 months before selling - make sure that you acquire property in one tax year and then don't sell that same property until the following tax yearI want to stress that you do not automatically lose out on 1031 treatment by not taking these steps, and similarly you don't automatically qualify for 1031 treatment by simply taking these steps.