We’d like to transfer their interests to an LLC – however, we do not wish to be treated as a partnership for federal tax purposes. 

I would not rely on the alimony unless the X is talked and supplies you with his expectations.I would try to treat this as a business decision that can be emotional.  

I personally would treat this more like equity and expect the risk and rewards of such.

It just feels weird to treat it as a partnership because a primary residence isn't a business. 

So many people treat MTR like a unique investment class, but it is not.

Treat them like a friend...they need to know, like and trust you. 3.

Super higher leverage that the purchase can't be approved by agency loan.In all practicallity , the era of 2016-2020 by aggregate should only produce 7-8% IRR if one correctly and conservatively.They targeted the naives investor in biggerpocket that lacks basic real estate valuation.The real problem is really the era of 2015-2020 where folks are treating CRE just like OTCBB pink stock and promoting it as a safe haven.

. - Regarding @Basit Siddiqi's statement that if you are a developer the income would be treated as ordinary income, this is correct.

Honestly if you just treat it like would I be ok living here if I had absolutely no other choice, you will be fine.I love my section 8 tenants.

On a lease but I don't try to treat our relationship as pure business.