We did our due diligence on this property and decided for the price point and the quality and all the other considerations we felt that we would get a nice return on this investment.

While this may exempt it from being classified as a rental activity, active participation remains a requirement, necessitating compliance with three tests: spending 500 hours on the property, dedicating at least 100 hours (and more than any other participant), and performing all the necessary work needed.Additionally, long-term viability and consideration of depreciation recapture are important concerns.

I suspect that unpaid late fees will also not be enough to trigger eviction but you will want to check.I have found that starting the process on the 5th day of the month for late rent is essential - they may pay late again but getting formal letters to pay or quit might straighten her out.

I am also thinking there may be tax advantages because both of the properties I currently own and rent make a considerable amount of money that after all deduction, depreciation etc.

Hi Lamar,  Acquiring rental properties can be a rewarding venture, but it's important to approach it with careful planning and consideration.

@Moises SalgadoThere are several considerations that can go into the analysis of whether you need an LLC or whether a large insurance policy will suffice.

Thanks for your consideration,Isa

Transferring the conventional mortgage to the LLC afterward will, in many cases, trigger the due on sale clause which will cause you to go get the commercial mortgage anyways.The DSCR loan could be an option.

@Greg TeplanskyThere are several considerations that can go into the analysis of whether you need an LLC or whether a large insurance policy will suffice.

However, still valid and important considerations to make as I continue to evaluate options.