This can provide a better depreciation benefit than traditional STR real estate.If permanently affixed to land, it qualifies for real estate depreciation (27.5 years for residential properties).Considerations:Zoning laws and campground restrictions may impact legality.Self-employment tax risk arises if you provide substantial guest services.Vacation home rules apply if personal use exceeds 14 days or 10% of rental days, limiting deductions.Audit risk is high, so keep detailed records of participation, expenses, and rental operations.Given the potential tax benefits and complexities, consulting a real estate tax professional is advised to ensure compliance and maximize deductions.This post does not create a CPA-Client relationship.

Its great that you have saved some money and have a desire but investing involves a risk of loss.

@Marc Zak Using an LLC for each property provides strong liability protection by isolating risks to individual assets, with income and expenses flowing through to your personal taxes on Schedule E.

Various legal setups can  mitigate a large part of this risk.  

Cross-Collateralization – A lender may finance the full $160,000 purchase by using your existing properties as additional security, lowering their risk and possibly reducing your down payment. 5.

What is the standard process from start to finish so we can eliminate as much risk as possible?

The property is paid off so you have options.Based on what you’ve shared, you carrying the note sounds like a viable option.Have you considered seller financing?

If so, you should also look into the insurance requirements during construction (both builder risk as well as the GC's policy, but particularly the GC policy).

I would rather lose 100 bucks a month in a solid area, than risk making 200 bucks a month out of state, class C-D, or in an area I don't fully understand. best of luck

They should be able to teach you about asset risk, neighborhood risk, lay out A, B, C and D class areas, have stats on delinquency trends, vacancy trends, and other variable cost projections.