I’m not sure of the legitimacy or legality of all of this, but it has me looking more closely at this type of business to see if that may be how I need to word my LLC’s services provided for my properties and then potentially grow to provide similar services for others’ properties.

I think this is a creative idea with a lot of potential, though also with some unique issues as mentioned above. 

It's designed to prevent taxpayers from deducting passive losses against non-passive income, which often leads to situations like you've described.Your concern about potential double taxation on the $2,000 net income is valid.

For example, I am a little concerned about some aspects of the business cycle recovery and a potential for a double-dip so I lean toward the safest part of capital stack which is debt (or low-debt equity).

What are your thoughts on that project and potential roi. 

conversely, as i already mentioned, if you buy something distressed, you have the potential for greater returns... but it's not going to be passive.hope this gives you some things to think about

@Jenifer Garcia while these numbers all sound like there's great potential with this property, $50k in rehab can happen quickly!

We're in western NC right now with our first STR purchase, but I'm looking for properties with MTR potential.

I like to call yellow letter senders to network with whoever is sending them out, and potentially get on their buyers list, but this one wont even get that call.

At least you’re not in danger of losing your home.