Flips are inventory and as such its ordinary income.. 

Full check on everyone.I also recommend holding the cosigner to a higher standard than you would an ordinary tenant.

Such conversion need not comply with the requirements of the following specific provisions of this chapter:  (a) Section 13-196-660 (height limits); however, in frame buildings, four or more levels of living space shall be prohibited and in buildings of ordinary construction, with or without attic living space, five or more levels shall be prohibited;  (b) Section 13-196-050; however, all dwelling units must comply with the exit provisions of Chapter 13-160 except basement dwelling units may have a second exit through a room containing a heating plant;  (c) Section 13-196-670 (stairwell enclosures);  (d) Section 13-196-680 (corridor enclosures);  (e) Section 13-196-690 (dwelling separations);  (f) Section 13-196-710 (basement ceiling construction); however, if the basement contains a dwelling unit the entire basement ceiling construction is to be wood lath and plaster of half hour construction;  (h) Section 13-196-720 (heating plants); however, basement apartments are to be separated from heating plants with partitions of one hour construction.

Families (we know) prefers 3 beds, single home houses in good areas with a patio all day long.

@Lee Davis,You can take distributions from an IRA without penalties after 59.5 however you would still have to pay ordinary income tax on the amount you take out. 

So, the gain is an ordinary income(not the capital gain).

Hi @Steven Gesis - When I rented a higher end place, I wanted:-A view with outdoor space (patio, balcony, etc)-Nice lobby and entrance - I could control the look of my home but not the common area so having this updated and clean meant a lot to me.

The limit is placed on applying your passive losses to your ordinary income. 

Not sure if this was the answer you were looking for however is exactly what I went through.Today, I currently own one that "IS" in flood and am looking to pull another cert.  780 Seems to be the magic number around here and my newly purchased Samsung Gear is reading Altitudes of 789 on the back patio however the basement reads around 780. 

There is also no coverage for settling, cracking, shrinking, bulging or expansion of pavements, patios, walls, floors, roofs or ceilings.)Water Damage (This provides coverage for damage caused by the constant or repeated leakage of water from a household appliance or heating, air conditioning or plumbing system.