You are charging 10% interest, which gets taxed at ordinary income so you will pay 2-5% state tax on that money as well as your income tax level.

This is way more challenging than what the gurus are saying, buy in the Midwest and flip or BRRRR and I'm relying on my team since I can't be there in person, maybe 2 to 3 times a year.I agree that a $10,000 profit (before paying ordinary income tax to the IRS) is way too small.

Violating this would make this ordinary income and you would owe: state, federal income tax plus a penalty.

I know you meant it as a joke, but these people are not ordinary immature "college students" age 17-22. 

And it will be ordinary income tax. 

You are looking for non-real estate related investments that are out of the ordinary? 

My understanding is that interest income derived "in the ordinary course of a trade or business" is considered business income and is subject to SE tax.

Guests used to be satisfied with the more ordinary, nice, and clean properties.

@Ammon JensenFor this purpose I do not believe you can write this off, add on that you are paying ordinary income on the 10-12% which let’s say is 20% and after servicing you may actually be losing money every month.

You can also take a further deduction for rebuilding your now-depleted reserves, but that has to be over a reasonable period of time as well.So you will be paying tax on ordinary income to the extent you pulled money out of the (properly established and safeguarded) reserve account less the amortized expense and a smallish deduction for that year’s contribution to rebuild reserves.