It's ordinary income, treated just like your real estate commissions.

Ordinary income tax, along with self employment tax on the income.

@Brit FosheeAgreed, that was not my deal.  

Your SOL my friend, Brit has a good point there keep them in the unit smoke damage only really goes so far.Keep them long term and then bleach and paint all the walls when they leave install some new flooring if you have any carpet.Next time it's for rent the best way to determine a smoker, Ask to see the inside of the car they drive or their finger tips:-).

Private lenders, in our case, are ordinary people that have a specific amount of capital that want invest with us to flip houses.  

You could also explain that you really need the tax benefits that real estate depreciation can provide (up to 25K offset to ordinary income), whereas interest income from a loan would be at your highest tax bracket. 

Thanks for the advice @Brit FosheeI will keep that in mind.

Hi Brit,  By 60 days, I mean I can close current contract, rehab and list within 60 days.

@Brit Foshee  thanks and also visit our web for automated seller leads . 

(I would advise if the answer is yes to make sure no viscous breeds are allowed and also get an extra security deposit and possibly extra monthly rent.)Also, something that helped us that you might want to consider is for your credit check is that the score matters, but we look deeper than the score if there are things that come up (and in New Brit there are usually things that come up).If tenants are skipping out on "modern life essentials" like utility bills, cell phone bills, car payments that is a huge red flag.However, if it is a result of medical bills or student loans (or possibly a foreclosure during the crash) you may want to look past some of those.