Keep in mind it is a risk and speculation, if something happens(market tanks, job loss, etc) then you will be out money.

A 1031 exchange doesn’t apply, but funding through a self-directed IRA can defer taxes, though profits from debt financing may trigger UBIT.To reduce taxes, consider forming an LLC for better expense deductions, offsetting gains with investment losses, or holding the property for 12+ months to qualify for lower long-term capital gains rates.This post does not create a CPA-Client relationship.

IMO cash flow provides a way to mitigate the risk of unexpected expenses and loss of income due to vacancies.

If indeed a loss is taken on this which it sounds like is a fair possibility then if the agent was representing you the agents E and O will/could kick in and that's where you might get some financial relief.

If she qualifies and materially participates, passive loss limitations won’t apply, allowing you to offset your income with cost segregation and bonus depreciation.This post does not create a CPA-Client relationship.

@Lincoln Waite Here is a great example of over complicating things into a net loss. 

Conversation is no different, motivation is definitely there, but telling someone, face to face, for this deal to make sense; 1 they over paid for the property, 2 they are gonna have to take a 40k loss in less than 12 months.

Hey @Sidney Duquette so I am not a fan of buying properties that can't perform with the hopes that it will build equity to offset the losses.

I did one house I may end up taking a small loss on, we'll see.

As the investor gains experience, they are not only able to more successfully foresee the “bumps” along the way, able to handle recessions, temporary negative cash flow, unforeseen capital expenditures without panicking, but will also recognize the opportunities necessary to turn a loss into a break even.