@Eric E.UBIT only comes into play in an IRA on leveraged real estate and running an active business.

Is it worth it to go through the proper process with the city and run the risk of a huge expense to make this a 3rd unit? 

They originally wanted 360k, but the mortgage would have the property running negative for the foreseeable future until all renovations are done, which I won't do. 

Buffalo rails: running 4+ yrs behind estimates.

Keep learning and running the numbers—you're on the right track!

You can learn about demand, running an airbnb, and all the moving parts.

We’ve also found that at least one of the authorities (Jefferson county) started to run some kind of property specific rental comps which can also affect the max they’re willing to pay. 

Flipping it will take time if you have to sell.Plus a home like that doesn't lend itself to a LTR unless there is a demand for high end rentals.What I would like to see is some examples of what you are looking at along with basic numbers you have run so far.

be sure to stick to your 70% rule for the flip, know your numbers. run everything conservatively. overbudget for time and costs but 15-20% Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I always advise to run a business for 3-6 months without an entity to see if it something you are making money in and something you want to continue doing.Once you have 3-6 months of activity, you have more information to provide to an accountant regarding income so he can provide suggestions on entity type.Best of luck