I think the correct treatment is for them to report the interest on their personal return if the IRS gets really nit-picky, but I don't forsee it being an issue since the amount is relatively small.

You could try ozone treatment first.

If anyone here has recommendations or can point me in the right direction to find legal counsel experienced in navigating subject-to-deals, I would greatly appreciate it.Additionally, I'm actively seeking opportunities in the multifamily real estate market.

As a PM, we manage units in Condo ***. but we do not actively seek out this type of business.

This has led to an increase in property prices and a growing population seeking employment opportunities.In addition to Columbus, other cities worth considering in the Midwest include Cleveland and Dayton.

Consider seeking legal advice or consulting with a property management professional for guidance on how to proceed with the eviction process in accordance with local laws.

Lenders are still unfortunately tend to be very conservative on the rent-by-room (SRO) type arrangements still - its an area that really could use some better understanding out there but just be careful with expectations because a lot of the treatment of these properties (even if nothing like a old-fashioned "boarding house") can be tough

Some people love them and actively seek them out while others don't care and would spend money to convert it back to normal. 

Ask your accountant to read Regs 1.469 and CCA Memo 202151005.You can have Nonpassive Schedule Es under certain circumstances but it appears he is listing it as passive, therefore creating suspended losses.Here is a previous thread: https://www.biggerpockets.com/forums/530/topics/1056436-clearing-up-confusion-on-tax-treatment-of-short-term-rentals

Wealthy real estate investors seek out properties with positive cash flows, meaning they bring in enough money to pay for themselves while also offering a favorable return on investment.