There was suspicion of drugs and we have had several disagreements. 

I have a flip w/ a lot of unearned gain in it, and am happy to be leasing it for (at least) a year to get cap gains tax treatment.

Unless you have elected corporation tax treatment for your LLC, the LLC is a pass-through entity.  

Capital gains are for an asset that you intend to buy and hold, not fix and flip or even build from the ground up.The IRS says this:The following transactions result in gain or loss subject to section 1231 treatment.

Hey @Theo HicksHere's my take the numbers are okay but if you have 500,000 to spend in Cincinnati market you could buy 6-7 turn key sfh or smaller 4 units and not have all your eges in one basket plus norwood is not the easiest place to deal with and depending on the side of norwood you have to be careful of the drug usages and the type of tents you will attract .

I am a chemical engineer in the water treatment community and am currently serving in the Army as an officer.  

Furthermore, investors get excellent tax treatment that aren't possible in mutual funds, etc.  

But I do think I need to address the drug issues - how do I do that?

If you have questionable morals, there are far more lucrative investment opportunities available to you than real estate (drug dealing, gun running, organized crime, etc.).I have a license in CA and am not aware of any legal or ethical requirement for me to disclose my license if I'm buying a property, as a principal.  

I actually want the resident to buy the house after a year, so I can get a large back end, no RE commission, and preferential tax treatment.