A franchisee type tenant can go boom and bust so you want rental increase every year to extract maximum income otherwise they could last 4 years and then go out leaving you with flat rent.Have it as a REQUIREMENT to provide ongoing audited sales.

You would just need to demonstrate under audit that you had the intent to hold for investment purposes but got an offer out-of-the-blue that you could not turn down. 

Play with your levers and reduce and audit all costs and increase income - but do it every year till the market tells you you are "there".And no disrespect to Carole G, but I hear this all the time - "I have to get this return or that return" - don't listen to that - lots of people who say this never do a deal because their expectations are rigid and/or unrealistic.

The IRS looks at each property individually, but I don't see how someone flipping 5-7 homes a years with no other job income, for multiple years could successfully argue "investment" during an audit.

She recently completed her first full audit by the Texas Department of Savings and Mortgage Lending, and got a very good score.Mindy also has her Real Estate Brokers license.

In an audit this puts you in a defensive position to rebut the presumption that you intended to sell within 12 months.

I'll not consider the check book style SD-IRA because my view and maybe some FUD coming from a somewhat well known SD-IRA/SD-401k Attorney saying the IRS is moving to start auditing SD-IRA holders especially if they hold real estate.  

Good think I paid for audit defense protection by them every year...I use that in addition to my CPA services for questions Turbo Tax can't answer, but I think ill keep using them with their audit defense legal/cpa/services.

Glen, RobinWelcome.In addition to Section 8 check out the local Affordable Housing programs around here if tenants qualify by generous income guidelines they can qualify for $500 of free oil or gas but if they request an energy audit and it is determined they benefit from more insulation new doors or windows they will provide for free.Shoot me an email if you want an attached US energy savings guide.Paul

you would need to keep very good track of everything, and i am not sure how the IRS would look at that if you were audited.