The case before you has no merit in Law, nor in Equity.I have used that defense successfully several times.

I've also read that general contracts might merit 20-40% markup over materials if bid out competitively.Q2: Do you know of boilerplate/sample contracts between an investor and developer on rental properties?

If you are going to continue to manage the property, that lends even more merit to my first idea IMO.

So, in my book, that eliminates most condos and townhouses.I think there's a lot of merit to SFRs over small multis.

Contrary to popular belief, being labeled a "dealer" doesn't mean that all your properties are subject to ordinary income; likewise, not being labeled a dealer doesn't mean that all of your properties are subject to capital gains.Each property will need to stand on its own merits, and the determination of whether a particular property should be taxed as ordinary income or capital gains will be made based on the intent of the transaction, not a "dealer" label applied to a business or individual.That said, if you are labeled a "dealer," you may find that you have a higher bar set for declaring one of your properties to be an investment as opposed to inventory.

There are a ton of different directions a new investor can go (and most of them have their merit).

I agree that there is a lot of merit to talking to someone to get a "feel" for them, and this is something you can do if you don't have too many rentals to deal with where you can take the time.

I have my money pretty well diversified if that has any merit.

I'm a huge fan of the Costa Mesa area (not necessarily for investing, i have no idea on it's merits, but I just love it there!)

You are buying the asset today, thus today's income is of merit not tomorrow's.