I called an exterminator for a treatment.

https://www.biggerpockets.com/forums/530/topics/1056436-clearing-up-confusion-on-tax-treatment-of-short-term-rentals

@Theresa McGallicher https://www.biggerpockets.com/forums/530/topics/1056436-clearing-up-confusion-on-tax-treatment-of-short-term-rentals

That turned out to be a fantastic opportunity, to which I kicked my best friend a couple of grand and hired my him to finish up the rehab, which by the way, was only about $10k in work, for floors and paint.The triplex was from a client of mine whose friend was dying of cancer and wanted out of the triplex so once he died, his wife didn’t have to manage the property.

@Craig LesslerYou should work with your tax pro to determine the proper treatment. 

Understand what other development requirements are for the residential units, for example, each unit may require an advanced treatment septic system (if not connected to sewer already.

If it is a normal 70/30 leveraged property, you may end up subject to tax on 70% of your returns anyways - so cost benefit, is that 30% tax free portion worth the high tax rates paid and additional filing fees to get tax free treatment on the 30%?

Assuming this is proper in your situation, with treatment of a tax partnership, reporting would be as such with a Form 1065 filed, claiming all rental income and expenses, and then issuance of a K-1. 

Numbers probably pencil beautifully, but there's a reason why. 5th ward was horrible back in the day, got better a bit, but now it's trending back to some of the worst crime. 5th ward is also a cancer cluster, not sure if you are aware of that.

-Has no crawlspace (common for older properties) so we couldn't see the foundation-Drywood termite/wood decaying fungi damage seen on all the windows/doors/parts of the beam on the exterior, parts of roof decking and rafters in the attic-Old leaks/moisture damage seen in the ceilings and attic-Parts of the roof has patch work-Roof doesn't have any permits on record (don't know how old it is)Seller's offer to me:-Fumigation treatment for drywood termites (tenting the house)-Replace and repair all damage wood throughout the house-Replace the entire roof with a new permit-Replace one window in every room (not all)-Pay for a structural engineer to inspect the foundation-Offer to get quotes for repairs and have a 15-20K budget to make all repairs, house is 500K.