You have to account for ALL expenses.Let's pretend you can rent it for $3,000.

An annual business tax as a hotel of $50 and collection and remittance of transient occupancy tax of 12% from renters is required of all short-term vacation rental operators.

Call it a dollar devaluation adjusted savings account. 

A $500k property should produce gross annual income of +/- $50K but can generate as much as $65-70k with the right location and amenities like a hot tub.

The contractors who do work for me have zero issues with me sourcing the material if disclosed up front and not holding them accountable for any material issues.  

If you were able to increase the value of the property significantly after the rehab, then you could bring the deal to a community bank  to refinance and take the hard money lender out.You keep all the equity and don’t have to file a partnership return for your annual tax return, which can be costly.  

My questions: - Looking to understand pain points of operating in Indio that you wished you had known - Besides the music festival in April, is there frequent tourism ensuring you are making the annual CoC ? 

you do have the ability to close your account at any time. 

Hopefully your accountant did not file an 8824 reporting the 1031 exchange. 

However, the depreciation claimed while the property was a rental must be accounted for upon the future sale of the personal residence, which could increase your capital gains tax liability.The adjusted basis of the property (original cost minus depreciation) will be used to calculate gains or losses at the time of sale.