No, you cannot create phantom losses this way.Some additional issues that we have not addressed:- holding rentals inside an S-corp has many tax disadvantages- you will likely jeopardize your $250k/$500k capital gain exclusion for homesteads- you will lose asset protection afforded to personal residences by most states- you will lose your homestead exemption for local property tax - your insurance will have to change from owner-occupied to rental, i.e. go up- and there's moreConclusion: there're reasons why nobody is doing this clever "strategy" but A+ for trying.

If you can find a fixer at a good price, with room for an ADU, and the comps are good, then you have a deal.Are you planning on flipping or long-term holds?

I hold licenses within real estate, insurance and securities for this very reason.

Some states have housing authorities that are more landlord-friendly (i.e. holding tenants responsible for damages or cleanliness v landlord).  

-Build a strong network in Detroit of real humans over a period of months, buy a better deal, hold it for 10+ years, weather early storms:  better chance for success.Even on that latter deal though, are you going to cash flow in month 1 or year 1 or even year 5? 

I would hold the cash for keys idea in my back pocket until I heard what they have to say.

I have two properties (exact same property just across the street from each other) one is a seller finance that is coming to the end of its contract for balloon payment and the other is a fix and hold Interest only loan that is also coming to the end of its contract for balloon payment.

Generally I'm a fan of hold until you die but in this case you are earning low cash flow on a large amount of equity.

Investment Info:Townhouse buy & hold investment.

As U.S. citizens residing in Europe, we are required by the local tax code to hold the property in our personal name.