Why the IRS lost and what were the unique circumstances in that case matters.As a little aside, if you want a bit of entertainment, with some help from Google, you can find my old sarcastic blog post about this "solution", and even a 10-page angry rebuke from the late guru who eloquently argued that the reason some investors badly overpay the IRS is the evil ignorant CPAs like Michael Plaks. 3.

Can someone please help me understand and give me some advise on any unforeseen issues we may incur and also some other options we can explore.

If I have this supplemental income I won't have to work anymore, barring no unforeseen rent decreases due to economic crashes. 

Thanks to our circumstances over the last couple of years we only really have about 6k in savings, some of which is currently intended to be used for initial stock and crypto long-term investments.

IF you really feel you need to make it work, then I would have the ones who wish to stay re-apply since circumstances have changed and you need to know if they meet the financial eligibility.

Since I don't know your specific circumstances, here a few nuggets that I think could help.1.

If you know the why in this circumstance, maybe you can come up with a solution that will not make them totally happy as they will not be getting as much money as they hoped, but some kind of mutually beneficial deal that helps out both parties so the sale does not sting them as much. 

The IRS looks at objective facts and circumstances to determine if the taxpayer's intent was to hold property for investment.

Do you, perhaps, have another low money down option that you like under these circumstances?

Given my circumstances, should I just continue saving more so I have enough to BRRRR with my own money or use my 100K to pay for a down payment meaning all my capital is tied up for a long time?