I love being a private lender but the fact that it simply increases my taxable income makes me consider shifting some of my note portfolio to multi-family perhaps...You might find this discussion beneficial where similar question is raised: https://www.biggerpockets.com/forums/51/topics/604...Owning notes in your retirement account (especially self-directed Roth IRA or Roth Solo 401k) is ideal since you can have tax-free income for the rest of your life if you utilize one of these vehicles. 

They do check occupancy cross reference with utility records, drivers license info, insurance to name a few.

once those utilities go bad, your not going to be able to sustain the capital expenditure to replace each of the well's or the waste Water treatment system. 

Since as disqualified person you are not allowed to provide a personal guarantee for a loan to your IRA you may not use conventional loan, you must utilize non-recourse loan (meaning the lender has no recourse against you personally, property is the only security for the loan).

So, after a little more digging, I found out that all utilities except electric are included in the income apartments.

I didn't include utilities because it was my understanding that most people renting or buying a home tend to pay their own utilities.

How do you split up the utilities? 

If we rent the home to him, and he lives in it (legally, has utilities in his name, etc.), as a tenant, he can do work on the home without needing to be an employee, correct? 

An example would be to utilize a limited partnership to restrict the control that the financiers (limited partners) have.

The lease includes an itemized list of utilities including Water/Sewage, PG&E and Wifi.