Personal transactions classify them as distributions if LLC.

If you are looking to do a 2-4 unit you will need 25% down and the average sale price is $900kSecondly, you need to be familiar with the local laws and license requirements, as you can be fined $5000 a dayhttps://www.airbnb.com/help/article/861/chicago--i...http://www.chicagotribune.com/classified/realestat...http://reason.com/blog/2016/11/07/lawsuit-challenges-chicagos-literally-in

Can I classify my friends rent payments to me as a gift?

For example, I have an asphalt project coming up that I know will not take my contractor 2 hours with 4 guys plus a mobilization fee, I pickup the phone, ask them "What is your minimum price for a 150sf 4" asphalt patching, compacted and slurried in 91789 zip, this is classified as service call" the estimator over the phone says "$1,200", I could get 5 bids in 30 mins, or I could simply go with that because I have a 1,500 budget.

If so, does this have grounds to be classified as a commercial multifamily(5+ units) which could increase my taxes and other payments?

I could rent out the Pasadena home and classify it as a commercial property on my tax return, which would allow me to do a 1031 exchange which avoids taxes altogether on a transaction for a new permanent home.

Looking at my local paper I found several properties listed under the "tax sale" portion of the classifieds.

lots of depends i see on this: may depend on the lender, and/or depends on your state, and/or possibly depends on your city - and depends what (how many units) is classified as multi-family, apartment, or commercial.Some places 3 or more is considered an apartment, others it's 4, some it's 2 -so just depends.  

This is why you need to check your Classified ads to where you want to buy a home for a rental and see what the going rent rates are for that area and then you will have a better handle of what to ask for. 

If you are not classified as a Real Estate Professional, you can take up to $25K in passive losses from your real estate endeavors, and those losses will offset any gains you may have elsewhere.