@Joe Splitrock  I guess it's no coincidence that you are right on point with your description of the character. 

You separate the holding company for a number of reasons: rental income is taxed at a some of the lowest rates, and the risk of loss is different in character than that of running operations, its tax filing looks different (as a business) than a business that runs operations (deducting capital improvements, etc.), among others. 

The comps the appraiser was using did not have the same attributes my buyer/ tenant was looking for though.

However, it appears you not lived it in for 1 out of the last 5 years.You can decide to live in the house for the next 2 years and use the same strategy.You can also use the like-kind exchange that was discussed.Creating an LLC will not help in your case - if anything it will just add up some administration costs.SIngle member LLC or a multi-member LLC are "pass-through" so the character and types of gain will "pass-through" from the LLC to you and your wife.

I agree with Jay Hinrichs and Steve Vaughn regarding the value of a good PM, and I attribute much of my success as a RE investor to a great management company that has managed my properties for 12 years and oversee them as if they owned them personally.

I signed a contract at the beginning with a GC that was more general than I wanted considering the large price tag, but he kept saying that he couldn't make it more specific until they busted up the concrete to see what was really going on (lots of unknowns due to age and character of building).

But where you see a shady character trying to squeeze your friend for more money, I see someone desperate and more than a bit foolish trying to make up for lapses in the contract's language to deal with a situation that has clearly gotten out of hand.If I were your landlord, I would still start the process of evicting your friend and let the magistrate decide how unclear the language of the contract was, and make sure that the case was in the record even if it cost me money and I lost.

That speaks volume to your character and how you will do in this business! 

If it's not everyday, then what is the action you do often that you would attribute to your success?  

Several you should pay attention to are:- Ordinance & Law: Provides additional building coverage to deal with rebuilding costIncreases due to changes in Zoning or Building laws- Personal Injury Liability: Libel, defamation of character, wrongful imprisonment, etc.