Earned interest is seen as ordinary income whether through a business or personally. 

My limited tax understanding would lead me to believe that this would be taxed as ordinary income, not capital gains.

It appears that you bought the property to flip it for a profit.In this case, your profit is Schedule C, ordinary business income (not capital gains) and also subject to the payroll taxes (FICA and medicare).

.; repair as neededInspect plumbing for leaks, clean aerators on faucetsTake care of any insect problems you may haveClean and repair deck/patio as neededClean out window wells of debrisCheck and clean dryer vent, other exhaust vents to exterior of homeClean garage________________________________________________________________Do the landlords on this forum perform any of these tasks? 

@John T. try this;One idea that I have read about, but never known anyone personally use it is this;Depending on tax brackets for ordinary income (interest) and capital gains, adjust price/rate as needed for best tax treatment.

I don't think that your Passive income (Real Estate) would allow the offset of your Ordinary Income / Short Term Cap Gains.

-New chairs on the patio after guests broke thoseSo I definitely like having that.

Business = ordinary rates + 15% SE tax.In case of a rental, you owe capital gain taxes on the 20% of the $30,000 down payment.Both scenarios above are over-simplified.

This would mean the main entrance to the home would be through new french doors off the dining area and the current front door would provide access to a private patio for the master.

The “real estate” professional qualification allows the deduction of RE losses against ordinary income.