Regarding taxes, I believe LLCs are pass-through entities, and you will just claim the income on your personal tax returns.

@Quiche LynnI think your confusing the term noteThe note is a promissory note - meaning the document that she signed stating she will pay this person this much money.What it sounds like is she wants to send a settlement offer to try and renegotiate the deal?

No "headaches" except for risk of near total loss of principle unless I put more money in...I'll take the risk of a project that I need to complete personally in exchange for a near-perfect risk/reward profile and complete understanding of the investment.

No personal income, tax returns or DTI to worry about.

If your income is strong and taxes are accurately reported, you have a shot. 90% of investors write off more than they make so this upside down calculation is what causes the average person to qualify for HELOCs.

I would personally feel better if they were at 4" though, particularly if there will be small kids as renters.

Keeping your building expenses separate from your personal finances can make it a lot easier. 

Hard for a person to imagine living there. 

It sounds like you are placing into service as a rental a house that was previously a personal residence.Your basis is purchase price + improvements made to the house from purchase to the time it was converted into a rental.

Our personal tastes lean more towards Reunion, but everything you read or hear about Championsgate suggests that calendars fill fast, high occupancy can be expected, and values stretch further in that development.