Good part: if you received rent before starting the rehab, your property was "placed in service" so you can start deducting some expenses and depreciation. 

In the initial years, cost segregation and other deductions can often offset much of this tax, so UDFI shouldn't deter you from real estate investing within an IRA, as it can still be a lucrative retirement strategy.

Thank you so much for your reply and any advice. 

So I would educate them on the fact that they were given a gift for many years, and now that you have finally chosen to raise rents to market (so that you can make the profit that you deserve) they will have to wait for a year so that you can put aside some of your new (and well deserved) rent increase to pay for their nrew floor.

So I have been investing in real estate in the south since 2021 and now have 5 properties.

Columbus has some strong dynamics…cheap prices, 3 F500 companies, military, hospital, kayaking enthusiasts, Kia car plant.It has as many bad parts as good, so do your research, but I do believe if it is just about the investment, there’s some money to be made there

This is my first auction purchase, so any insights or advice from those familiar with this process would be appreciated.

So the current owner is a large investment group that bought a lot of property last year and has decided to diversify now, so while I absolutely get your hesitancy about the possible lender issues, I am not as worried about that as wondering about the terms of the loan itself.  

I did mention the general neighborhood that has the word “Lake” in it so the AI must’ve picked that up.

However, not everyone has the income to qualify conventional, so the alternative route would be DSCR loan where the program doesn't look into your income, instead it evaluates based on the subject property rental performance based on the ratio system.