Dividing the property into separate lots and placing them in distinct LLCs is a smart move to limit liability.

I would flip the script and argue under those circumstances the client is serving as the bank for the contractor and not the way you presented it.

Remodeling homes into something distinctive and desirable, like entertainment-centered properties, can definitely set you apart in the rental or short-term rental market.

I hope I don't see you all over these forums one day insisting you did it all by yourself and telling people who aren't as fortunate as you were that it's all about pulling yourself up by your own bootstraps no matter what your personal circumstances.

Even if I were to collect the late fees it doest’t materially alter my properties performance and my tenants appreciate the flexibility in the very rare circumstances where they are late. 

Typically a cost seg can provide a ton of benefits to accelerate depreciation on pieces of the purchase that wouldn't usually be allocated out under normal circumstances. 

The distinction is important with respect to your financing question and options. 

Each building will have their own stipulations as @TomCasey mentioned, but the 32+ day rule may help to bypass them in certain circumstances.

Based on all the facts and circumstances, you participated in the activity on a regular, continuous, and substantial basis during the year.

They each have their own distinct feel.