Ethical attorneys. 

I think the correct treatment is for them to report the interest on their personal return if the IRS gets really nit-picky, but I don't forsee it being an issue since the amount is relatively small.

You could try ozone treatment first.

Lenders are still unfortunately tend to be very conservative on the rent-by-room (SRO) type arrangements still - its an area that really could use some better understanding out there but just be careful with expectations because a lot of the treatment of these properties (even if nothing like a old-fashioned "boarding house") can be tough

Ask your accountant to read Regs 1.469 and CCA Memo 202151005.You can have Nonpassive Schedule Es under certain circumstances but it appears he is listing it as passive, therefore creating suspended losses.Here is a previous thread: https://www.biggerpockets.com/forums/530/topics/1056436-clearing-up-confusion-on-tax-treatment-of-short-term-rentals

And all that doesn't even account for the ethical questions around wholesaling..   

If you're willing to bend your timeline a little to give yourself the best shot at qualifying for 1031 exchanges and being super tax efficient with your properties, you could try doing the following: - Hold each successive property for at least 12 months before selling - make sure that you acquire property in one tax year and then don't sell that same property until the following tax yearI want to stress that you do not automatically lose out on 1031 treatment by not taking these steps, and similarly you don't automatically qualify for 1031 treatment by simply taking these steps. 

If you are repairing your own property that is an increase in the basis of the property, which will result in better tax treatment when you sell.

And inventory does not qualify for 1031 treatment. 

It is bad news for agents who don’t bring anything to the table besides a lawn sign and an MLS account.But today’s agreement isn’t just good news, it’s GREAT news for hardworking ethical agents.