Hello biggerpockets,I am trying to understand all the potential *legal* issues I can run into by trying to split a regular single family home that is zoned as such into essentially a duplex with 2 separate tenants, one living in the house and the other in the basement.

A lot of years ago, I wrote a technical paper on this topic (long before there were blogs or MicroSoft Word).

Out of state investing is fraught with issues large and small, so stay close to home and avoid the hassles OOS involve. 

You did not mention any payment issues, have you been collecting mechanics liens with each payment installment?

Taylor,I hope you aren't still dealing with this issue!

Each year by January 31, you or your bookkeeper has to total up how much you have paid to each person and issue each one a 1099, which is a simple statement of that total amount with your contact information as the payor. 

I technically don't need the seller financing and could qualify on my own, but it is a nice to have.

3- To record incomes and expenses correctly for tax issues, do we need to make an official contract for the renovation (between the LLC and one of the owners), or is simply issuing invoices and receiving payments in the LLC’s bank account enough?

  :)Financing for FHA and VA  will evolve to address their issues. 

Hi Matthew, Remember, navigating legal issues with tenants can be complex, so it's crucial to proceed cautiously and seek professional legal advice when necessary.