You have not added to much difficulty in terms of tax preparation, but in terms of tax record keeping you definitely have.I am not a tax professional, but having been a landlord who has tried(and failed) in my own tax situation, I would love to help point you in the right direction.Being your first year, it is all but a certainty that you have taken a loss.

ParkerI find myself in very similar situation in Indiana.

What paperwork should I keep a paper trail of to make things like taxes and other situations better/easier for myself?

Is this a person who is, from here, going to turn their life around from the desperate situation that they find themselves in right now, such that they are willing to take a Subject-To deal? 

Not questioning your judgement/assessment, just trying to understand the situation to best advise you. 

Here are some general guidelines: Lien Position1st Position LienEquityMinimum Down Payment of 20-25% (a 30% equity to sale price is preferred)Down Payment made in certified funds and not borrowedMaximum Funding of 70% ITV (Investment to Value)SeasoningMinimum of two monthly payments already made12 months or more preferredPayer CreditCredit Score of 650 or higherNo major derogatory trade lines (No 90-180+ days delinquent, foreclosure, repossession, bankruptcy, etc.)No decline in credit since purchase of businessTermsPrefer 60 months or lessMaximum of 72 monthsNo Balloon Payment preferredCash FlowBusiness has positive cash flow1.25 debt service coverage ratio preferred.DocumentationPersonal guarantee from a creditworthy individualStandard documents including Note, Security Agreement, and UCC-1 filing.Tax Returns on the business that substantiate profit and loss statements.OtherPayment history current and verifiablePayer Interview indicating buyer is satisfied with business and comfortable making paymentsMotivation for selling the note is not a result of a deteriorating businessConsideration of high risk businesses or geographic areasIn these situations, sometimes a partial is a better option. 

Plus, very important to understand the new layout and how the dig down will effect the existing stairs, plumbing, etc.Happy to connect and talk through your specific situation because @Bruce Woodruff mentioned every project is different and know one price fits all espeically with these complex jobs.Where at in Chicago is your building?

Covering the mortgage isn’t an issue, but I’m considering factors like: Multi-Family: House hacking would help offset costs right away, but I’d likely need to put money into renovations upfront.Single-Family: Easier move-in with no immediate renovations needed, plus potentially lower tenant turnover once I rent it out For those who have been in a similar situation, what did you choose and why?

Or stay depending on your situation. 

I think the SEC would like to know about his participation with Norada and the current situation at hand.