Many people I know will not invest in the City of Detroit due to the large, incompetent, and arguably corrupt government. 

Your home state may require you to pay a second state income tax on profits as well as the federal IRS bill.  

I acquired this property with a 20% down payment and an 80% seller financing note with a 2-year balloon to allow myself enough time to stabilize it and get longer-term commercial debt on it.Over the last 7 months, I was able to raise the other 4 units to market rent and lease out the larger 5th unit to another state government agency on a multiyear lease.

Sounds like government logic to me 🙄.  

If the government passes the new bill advertised early last year it will potentially shut down 30% of STRs. 

However, if you are worried about being sued, you should use the best level of protection that you can afford.Your state laws: The laws governing asset protection vary from state to state.

Typically those are a google away, however, if you think you are starting to hone in on an interesting area, it's worth calling the CIty and County, as well as a couple of local well informed realtors, to make sure you didn't miss the governing laws in your research.

I was thinking that too. in this case if you lose your money the governement still wants theres. 

Sherman might fit that bill as well.One thing I've been thinking about is the quality of city government and services. 

This is different than acquiring an investment property with the intention of holding for appreciation and rental income, which does get capital gains treatment, subject to 0%-23.8% federal rates depending on income and circumstances.