The portion of the mortgage interest allocated to the rental unit is deducted on Schedule E.If you sell for a profit and meet the 2 of the prior 5 years ownership and occupancy rules, you can exclude up to $250K per taxpayer from the portion of the capital gains attributed to your residential unit.  

Kano, I think it would be best to consult an attorney or insurance broker, but IMO this would be a special group, which could require additional insurance.

I have to say, I'm surprised you didn't take @Rick Harmon up on his offer to personally review the details of your deal... this wasn't an offer from just a random poster, but from a very seasoned investor who specializes in California probate.

Scott The Book on Flipping Houses, The Book on Estimating ReHab Costs http://www.biggerpockets.com/flippingbookYou might consider Niche or Specialized Housing like student housing.

Check with city or county depending on where it is and see if any special assessments coming or water rates have not been raised in awhile.

Thank you so much for sharing this, these 5 attributes I have applied since day one and I intend to move forward in leaps and bounds!.

I finance my flips with a hard money lender that specializes in the rehab fix and flip space exclusively.  

Scott The Book on Flipping Houses, The Book on Estimating ReHab Costs http://www.biggerpockets.com/flippingbookYou might consider Niche or Specialized Housing like student housing.

Perhaps you can have a special rate for week-long parking and a special rate for month-long parking with in and out privileges if they were to get a sticker in their window or something along that line.  

Nothing special.