No matter how well you plan, there will always be unforeseen issues – from hidden structural problems to unexpected repair costs, or project delays.

And it's commercial, intent is for revenue purposes, so revenue is the most important of the 3 to consider, by far, unless there is some extenuating circumstance. 

Here is the summary if you are interested.In this case, the main question is when did the investor completed his start-up phase and became actively engaged in his business.Whether a taxpayer is engaged in a trade or business is determined using a facts and circumstances test under which courts have focused on the following three factors that indicate the existence of a trade or business: (1) whether the taxpayer undertook the activity intending to earn a profit; (2) whether the taxpayer is regularly and actively involved in the activity; and (3) whether the taxpayer's activity has actually commenced.

Additional concerns include area study, property inspection, knowing local market circumstances, and legal adherence to Philadelphia's landlord-tenant rules.

But managing 4 separate leases, needs, personalities, life circumstances, turnover rates, etc, will be a lot more work than renting out the whole house. 

Profit margins have been slashed to bare bone in most circumstances, even into the red for several.

I do indeed know it.. but also would not hurt to understand outside markets (circumstances change) also certain states or not as land lord friendly as others.

@Derek P.No themoney can be reinvested in more houses as it seems you are doing now and it can always be taken out of the IRA with or without penalty- so it depends on your circumstances. 

Under no circumstances would I let them stay.

I have already filed a formal complaint with the Contractors State License Board (CSLB) regarding this matter.Given the circumstances, I am seeking your advice on whether pursuing action in small claims court would be a recommended course of action.