Btw- I have a 2016 home- 3bed, 2.5 bath, second living room upstairs, 2 car garage, large fenced-in yard, covered porch with patio furniture, and more-- so I think it is a pretty desirable listing! 

Yes, in some cases - and I would caution that such cases are rare - it could be a theft/casualty loss or an ordinary business loss.

Since you are discussing syndication, it is likely a passive investment to you.Whether the loss is ordinary or capital will depend on the type of investment and the positions taken by the partnership and will be displayed on the K-1.There are further things to consider such as whether the K-1 is fully disposed of or not.

The resoning behind this is that while capital gains would be at a lower tax rate, the interest is ordinary income is taxed at a higher tax rate. 

If you give them $1M and you collect $100k in interest, that interest is taxed at ordinary income rates.

Each unit has a yard and patio.

This deduction can offset the income generated by the property, potentially reducing it to a tax-neutral position.For those with full-time jobs, the challenge lies in the IRS designation of "real estate professional," which has specific hour requirements that must be met to take full advantage of these deductions against ordinary income.

As long as the LLC member(s) are active participants in the rental operation, up to $25K in pass-through losses can be used to offset other ordinary income on the personal 1040 (subject to MAGI limits).

One person's unique could be my ordinary, and vice versa. 

Seller financing does not always sell for more money and if there are big price declines then you may end up having to forecloseMy recommendation is to sell it with borrower getting traditional financing and put that $ in a tax friendlier account than loan interest = ordinary income rates