Let's break it down with precision:The "Pain" (At First Glance):Your $2.8M sale splits out as:Building (§1250): $2.3MPersonal Property (§1245): $500KOriginal Basis Allocation:Building: $1.6M (depreciated over 27.5 years)Personal Property: $400K (fully depreciated)Building Depreciation:Annual: $1.6M ÷ 27.5 = $58,182Total over 10 years: $581,820Gain Breakdown:Building (§1250):Sale Price: $2,300,000Original Basis: $1,600,000Less Depreciation: ($581,820)Adjusted Basis: $1,018,180Total Gain: $1,281,820Unrecaptured §1250: $581,820 (25% max rate)Capital Gain: $700,000 (20% max rate)Personal Property (§1245):Sale Price: $500,000Adjusted Basis: $0Ordinary Income: $500,000The Strategic Play:Remember those suspended passive losses you couldn't use?

I guess they are holding you ultimately responsible for pricelabs raising rates.

Also, rezoning from RS-3 to RM4.5 is like a .0001% chance and depending on your ward some alderman refuse to consider spot zoning no matter what

Of course "hoping" rates will come down is not a sound strategy so finding a way to assume a loan that already took advantage of low rates is a great option.If you were starting over and targeted a large SFH, would you try to maintain the property in a way that would still attract regular homebuyers (not investors) if you needed to sell?

Fort Collins did it since the 1960s and only recently created a law against it because of rent rates.

We raised $4.5 million in equity and got $4.5 million in fixed rate debt from Freddie Mac at a 5.85% rate.

It depends. all you talked about was the property but financing is more about the borrower, their experience, their credit, the cash available etc.

Due to current interest rates, many CAP rates are much lower than they should be and usually there is only so much price discount a non-delinquent seller will be able or willing to offer.

Navy Federal does HELOCs on investment properties…not sure if LLC is OK…and rates are in the 10.75% range for an investment HELOC in March of 2024.  

That will get you looking at cash flow and end up in a lower rated area than you think.