I have 2 options:- finance the construction pre-selling the apt, and take my profits (expected to be around 700K pre-tax); or- finance the construction with a 6-7%/year loan (collateral = my house), keep the 10 units, and once the building is completed in 24 months, rent them for circa 180K/ year gross.

She’s currently not paying rent, and while she has some health issues and no stable income, she’s been communicative and open to general talks, with a possible option to vacate through a cash-for-keys arrangement, though this might take around six weeks and some hard work.I plan to rehab the property and eventually rent it out, potentially to a Section 8 tenant.

It's rare that you'll find a good seller for #1, so the only option remaining is to document the condition from the day of purchase.

Looks like you have some good options in front of you @Martin Phinney.

They have decent rental markets, and there are options where you could get in with a 20% down payment.

This is a buy and hold in a great location in a great market Does anyone know of a group i can post this deal And last option we were considering was to use her cards to pay off my debt so then I can buy the house from her and get a loan on it If u made it this far thanks 🙂

Just make sure the town is ok with the land being zoned for multi-units, and look into construction costs, financing options, and permits ahead of time.

The original post leaves the door open for a challenge by the IRS, so the safe harbor of holding it for investment for two full years is the safer option.  

I would go with option A.

I've done a lot of research and even worked on running numbers for certain options (just as an exercise), but I'm now looking forward to jumping in.