My suggestion is that you investigate the above further and if you want to save your credit follow this advise.

Still investigate to make sure its not a sour landlord angry their tenant wants to leave.3.

I'll have to do some more investigating after we close on the house, as I'm pretty sure that it's the original wood flooring (from the mid-1960s), but I don't know what condition it's all in.The carpet's either got to be cleaned or removed, and I totally want to do this on a shoestring.

My fear is that if the transaction ever had any reason to be investigated, the creation and sale of the LLC solely to get around a legal limitation could be construed as fraud.

An article by Realty Trac last week  http://www.realtytrac.com/news/real-estate-investi... gives some good insight (and neat 'heat maps' to show gross rental yield by county). 

A forensic engineered cost segregation study is performed by a qualified construction engineer with a site survey followed by 4-6 weeks of number crunching and preparation of documentation. 

I have been investigating this here in Charlotte.

I'll have to investigate what that means.

I started at the IRS in 1996 - twenty one years ago, and after I started I was promoted to the Criminal Investigation Division.

At least start investigating the alleged current landlord more.Again great job on your vetting process!