You want to be treated as if you are re-selling an existing house that has already paid the sales tax.

Some of the pros, you live in the house and can actively maintain it and learn the importance of preventative maintenance and treating issues before they get out of control. 

@Jay AminThere are different “categories” of income for income tax purposes, and they are “bucketed” together in your tax return and treated differently.

This will put you in contact with investors in the markets you are interested in and provide relevant information about how they are dealing with actual situations.Final piece of advice is to treat this activity like a business from the start. 

Also, if anyone in the SD area is interested in meeting for coffee or a beer (my treat) and talking RE, Let me know.  

LLCs that are not SMLLCs and disregarded entities are generally treated as partnerships for income tax purposes. 

When you find a reliable source for deals in the city, treat it generously and right.

I have financed small rental purchases off a line of credit, but I have also treated it like a mortgage, setting up an automatic payment to pay it back every month just like any other mortgage, accounting for principal and interest to where it is always shrinking with each payment.  

I would treat the rent and contract for deed payment separately.

I prefer they be treated as return ON.Let’s see what other more experienced folks say.