Hi, Michelle,We frequently buy materials (tile, kitchen cabinets, bathroom fixtures, countertops, light fixtures and ceiling fans) as well as appliances on Craigslist.

I've been a landlord for over 25 years and have found that the closer I am to Fair Market Value the higher my maintenance costs, the more telephone calls/emails I get and the more frequent my turnovers. 

If I were planning on investing in Seattle this wouldn't deter me.What would deter me is their homeless problem, socialist city council woman harping about rent control, prices, the traffic and finally the frequent protests.I know prices are surging and housing is tight but the political climate there would concern me enough that I wouldn't consider investing inside the city limits.

What's the possible legal issue that can arise in the future if landlord keep turning a blind eye, not adding frequent Guest as co-tenant?

Always, I repeat ALWAYS do a full and complete analysis on a deal and NEVER NEVER ever purchase a property just based on any of these so called Rules. 

Buy, rehab, cash out refi, rinse and repeat is a great way to quickly increase your portfolio but your overall cash flow (assuming 50% expenses) is pretty low.  

I called him out on it and when sending new copies back two more times, he repeated it two more times with other parts of the contract.

I would not repeat and would recommend an alternative solution primarily because it forces you to be a short-term investor in the stock market which is no better than being a short-term investor in real estate (not a rehabber, but somebody who banks on appreciation/cashflow over 3-6 mos instead of 3-6+ years).If a good property comes along you have to liquidate stocks immediately.  

@Chris ChristiansonYou could always apply for an IRS private ruling which is a good idea for questionable transactions. https://www.irs.gov/help-resources/tools-faqs/faqs-for-individuals/frequently-asked-tax-questions-answers/irs-procedures/code-revenue-procedures-regulations-letter-rulings/code-revenue-procedures-regulations-letter-rulings

@Darrell Boaz I would add that comps (solds not actives) change frequently as real estate is dynamic.