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).

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.

I think we can all agree that the potential risks involved are something to consider prior to selling a property using seller finance.  

Are more risk averse investors just avoiding these areas, even if they have good STR potential?

Investment Strategy:Buy and HoldInvesting herebecause: Potential to Appreciate in Long Term (10yrs+), want to build NetWorth, Affordable in my budgetYear 1 Evaluation: Gross Monthly Rental Income = $2,042.50 Monthly Cashflow = -$76.05 GRM = 12.79 Cap Rate = 5.12% CoC ROI = -1.11%Hoping that theinterest rates go down so that the monthly cashflow becomes +ve.