So in this case part or all of house's exterior walls would be left untouched.

Typically, if you only own one or two properties, all your other expenses (maintenance, mortgage interest, property taxes, DEPRECIATION), tend to outweigh your gross income so that your actual net that flows down to your personal tax return is a loss and not a gain.In that case, you get to deduct up to 25k a year in losses (or all of it if you're a real estate professional).Now if your houses are still cash flowing after all those expenses and your LLC really does have a net gain for the year, then that net gain is going to be treated as income to be taxes by the IRS at the end of the year.

I was hella impressed by the transparency and Jay's willingness to meet me either halfway or all the way. 

So even though most were on a lease it operated more like a hotel where rent was collected weekly.If you waited until the end of the month the tenant would have spent some or all of the rent money on booze, entertainment, etc.

Ned, are you talking about CA or all states?

These folks are in over their heads, or crooks, or slick or all of the above.

Speaking of meters, most likely some of the lights and outlets in the basement are split (or all) connected to one of the existing meters.

Are there any bedrooms on the first floor or all of them on 2nd floor?

Either a portion of it or all. 

I do know if YOU do any kind of work to the house that exceeds $500 and YOU're not a General Contractor, you have to hold the house for 12 months before you can sell it, or all of the work has to be done by a GC.