That can greatly change how the income from the sale will be treated.

So we're treating this as a challenge, getting the down payment else where (this is along the lines of Rich dad poor dads theory of not using your own money).

You will report both on their respective places.If you are 100% passive investor:The interest you pay on the loan is an expense to your business, if all of your investing is fairly passive it will be treated as an interest expense on Form 4952 http://www.irs.gov/uac/Form-4952,-Investment-Interest-Expense-DeductionYou will include 100% of the interest received on Schedule B to be reported on your 1040.Yes, you do have to issue a Form 1098 to the new buyer showing 100% of the interest paid. http://www.irs.gov/instructions/i1098/ar02.htmli.e.

If it was a rental, you treat it as part of the sale of the property.

The 4-plex should be treated in one section on Schedule E.

If someone attaches a judgement against you; you will be on the hook until it is paid.Typically an umbrella policy is only a couple hundred for a 3-4 million dollar policy.I'm a tax accountant and represent people before the IRS.You will be treated as a sole proprietorship for purposes of flipping homes.You income is the sales price, plus any other miscellaneous income you may receive.

My thoughts are if your going to take away commission to reduce the price of the deal dont be surprised if you are not treated well in the future when you deal with agents and deals in the mls.

Will home prices do down, sure, anything can happen, but for those who are investing in the long run, I think we are cautiously optimistic that can ride this out and be rewarded in the long run.Another point worth mentioning is that many on this site are looking for STEADY cash flow rather than appreciation, that is a more conservative way to play real estate unlike the boom a few years back when everybody is treating their home like an ATM thinking that the prices will continue to increase forever.

Please correct me if I'm wrong, but if I'm right, I think one of the issues in your perspective might be that you're treating property investing as a substitute for work or other standardised income streams - I think it's more realistic to think of it as either a savings scenario, where you try to get the best return rates possible at the minimum possible risk, or alternatively, as supplementary income to an existing stream.Living off your investments completely normally means you either have a very large and lucrative portfolio (which, indeed, takes years to build), or that you've somehow turned it into a full time business, such as being a realtor, buyers agent, fixer/flipper, builder/developer etc - but that's a whole different yarn that should be correctly titled "running a realty related business" as opposed to "investing in real estate".Again, if any of my assumptions are wrong, please correct me.

That is the wrong way to go about treating a tenant.