And trust me, there have been numerous motivators in the last 5 years giving me several strong enough WHYS to keep me wanting to make RE work. 

For this one, for instance, I can tell I have a kitchen rework, 2 bathroom guts, at least some window replacements, a lot of landscaping cleanup, entire interior repaint.  

Of course, you might well uncover other "improvements" made over the years that may need re-working also...cut joists or columns, termite or wood rot damage, etc.

His costs are to demo house, rework existing water and sewer line, grading, and rezoning.

Perhaps you could extend your live-in timeline and re-work your return requirements?

What's the projected revenue after the rework? 

@Joseph Scorese, we're yet to create the entity, I'm keen to get legal perspective on our proposed approach before doing so, to minimize rework and unnecessary cost.

I know that now.I tried to tell the auditor that I was better educated now and would be happy to re-work my 2014 and 2015 returns placing the Schedule C expenses to their proper Schedule E categories.I was told "NO your can't revise your return once under audit." 

In order to do that she must spend 750 hours a year doing real estate related work AND more hours doing RE work than anything else. 

Well, at this point I am trying to build a scalable system so there's less re-work on the back end as things get larger.