Consider how you can enhance income potential.

Hope you don't mind me trying to do an exercise here and come up with a more realistic ARV. 

Learning from my grandparents, by the time you hit your mid 70s, you struggle walking up the stairs, going to the grocery store is the only time you get of the house and get exercise, it's not safe for you to drive... the quality of life is horrible.

Compare with Florida, where all the houses are required to build with concrete block (at least first floor) not wood frame, and also many building code enhancement for hurricane.

Notably, the property's efficient water management system redirects all guttering and downspouts to underground piping leading to the property's ponds.Expansion and Enhancement Plans: With a strategic infusion of $650k, we are poised to realize significant value and cater to the burgeoning demand in the Tulsa region.

I guess the exercise for me here to was to see if it was even feasible to use the FHA loan in a creative way to cash flow in a hyper-competitive market like the Bay Area. 

You would have to exercise your option and get a loan on the house and pay off the underlying 1.5 million and then pocket the remainder.

We actually have a scanner in the house, so this will be a good exercise for it.

And the IRS does do this.Here are some factors from a case.In determining whether the income should be classified as ordinary income or capital gain, the court evaluated nine criteria: (1) the taxpayer’s purpose in acquiring the property; (2) the purpose for which the property was subsequently held; (3) the taxpayer’s everyday business and the relationship of the income from the property to the taxpayer’s total income; (4) the frequency, continuity, and substantiality of sales of property; (5) the extent of developing and improving the property to increase sales revenue; (6) the extent to which the taxpayer used advertising, promotion, or other activities to increase sales; (7) the use of a business office for the sale of property; (8) the character and degree of supervision or control the taxpayer exercised over any representative selling the property; and (9) the time and effort the taxpayer habitually devoted to sales of property.

I started having typed discussions with my future self to help me answer tough questions/challenges I am struggling with...super powerful exercise.