Minus re-zoning expenses- Any advise for this transition into low income/transitional housing?

‘I agree the vast majority are small investors, or new to passive investments.  

I'd add a late fee to the lease renewal, but if they are struggling to pay rent now, when the baby comes, they will be down one income for a bit and then have child care, so will likely have more problems. 

This provides a more seamless and passive experience for investors.

.- My Goal: to have $10k/months of income to replace my day job.

The biggest challenge is finding a team you can trust that will run the business for you because its not passive at all. 

The benefit here is that I cannot get behind on taxes and if I fall on hard times and my buildings are empty, my rent payment is based on my income, so I guess that is attractive.

The advantage if needed by calling it an investment home is that you can use the potential income from the property to help your debt to income ratio where you cannot do this on a second home. 

Will the capital gains in this scenario be considered passive income from an IRS perspective ?

But, once you do build some wealth and have a high income, you realize how much you can save/make by owning the right real estate - numbers that far exceed any cash flow you might make on a property.