However, California treats rental income as passive regardless of REP status, so these benefits won’t apply at the state level.This post does not create a CPA-Client relationship.

They have also outsourced their TAX SERVICES and despite my constant request to expedite my tax filing so that we can apply for a CRITICAL BUSINESS LOAN TO EXPAND OUR BUSINESS, THEY SAT ON OUR TAX and BOOKEEPING files for 7 months.

I took what I learned, applied it, made mistakes, and kept going.

You appear naturally to default to decision making based upon emotions and speculation on what worst case scenarios may be. 

This allows you to report rental income and expenses directly on Schedule E of your joint tax return, avoiding the need for Form 1065 and K-1s.When you applied for an EIN, the IRS automatically classified your LLC as a partnership, which is why it instructed you to file Form 1065.

Quote from @Michael Smythe: @Zachary YoungRecommend you first figure out the property Class you want to invest in, THEN figure out the corresponding location to invest in.Property Class will typically dictate the Class of tenant you get, which greatly IMPACTS rental income stability and property maintenance/damage by tenants.If you apply Class A assumptions to a Class B or C purchase, your expectations won’t be met and it may be a financial disaster.If you buy/renovate a property in Class D area to Class A standards, what quality of tenant will you get?

So, make sure YOU understand the copy & paste info below:Recommend you first figure out the property Class you want to invest in, THEN figure out the corresponding location to invest in.Property Class will typically dictate the Class of tenant you get, which greatly IMPACTS rental income stability and property maintenance/damage by tenants.If you apply Class A assumptions to a Class B or C purchase, your expectations won’t be met and it may be a financial disaster.If you buy/renovate a property in Class D area to Class A standards, what quality of tenant will you get?

Even though you will naturally want to advertise in your area only, that is a mistake.

The same skillsets apply to your question.

If so, would a different (smaller) ratio apply to how many units a certain population should have?