@Archie BarrettJust wanted to say that there are MANY reasons to consider a DSCR loan vs a conventional loan, not ONLY if you do not qualify for a conventional loan due to DTI.Possible DSCR Benefits:Can do cash out refi prior to 1 year seasoning of the mortgageCan do cash out refi with no seasoning of ownership (with some lenders)Can do a loan with much less paperwork (this comes more into play every time you add a property)Can close on a DSCR loan directly in your LLCCan have your DSCR loan not report on credit (depending on the lender)DSCR loans can be cheaper than conventional loans for many credit scores and down payments.

Oftentimes, we would work closely with CPA to make sure how our borrower's taxes can be filed that would save them from paying taxes, but also making sure they can qualify in a lender's perspective.You would want to make sure your first few deals has an acceptable of return in order to lower your DTI and expand your investment portfolio in Real Estate.

Additionally, depreciation on the building (not the land) is a significant deduction, and if you manage the property from home, you may qualify for the home office deduction.

So as long as a sale qualifies for a 1031 exchange you can do as many as you want in a year. 

My question is, do I qualify as having lived in the house for this time, to get around the 2 out of 5 years capital gains tax rule?

Typically minimum loan amount of $250-300k and borrower will qualify off of the income of the property, usually 25-30% down is required.

If I utilize qualified funds would this investment be subject to UBIT re UDFI?

(Most notably, they've gotten REPS aggregation all mixed up in the past.)Based on the regs seems that:- 1245 ordinary income recapture applies to some forms of property that qualify as "real estate" for 1031 exchange purposes- 1245 recapture on such "real estate" overrides 1031 deferral such that 1245 depreciation is recaptured to the extent there's a trade down in 1245 property in the exchange@Heidi Kenefick There are many additional mitigating considerations worth discussing in conjunction a real estate tax accountant.    

First, it could help you qualify as a real estate professional (REP), or at least make it easier to qualify, which would allow you to offset passive losses from your rental properties against your active income.

Talk to Real Estate CPA before doing it.I’d recommend putting this $100k in a in an LLC along with rental to formalize the partnership.