It might also set the new property taxes rate, and your gains (or losses) rate...

The bank will sell at a loss and the next owner will evict.

Come to find out SC does not allow for out of State Sched E losses.  

He purchased lower than they paid, so it does beg the question of why they are leaving Memphis at a loss?

You would be hit with a 10% penalty, plus income taxes on the TSP, plus have less money growing in your TSP until the time you withdraw (opportunity loss).  

Are you saying total construction cost + loss of rents was $89k and you were paid $95k and pocketed the rest? 

If you've completed a BRRR and later on the rent falls below your expenses AND you're underwater, you're taking a loss.

I had not thought that renting room by room would be a feasible long term strategy given most peoples aversion to sharing common areas - but in an area devoid of multi's it would make logical sense.

Expense Item Monthly Expense   Mortgage (includes property tax and insurance) 1027 Repairs (ex plumbing, AC) 375 Maintenance (ex yard stuff, light bulbs) 375 HOA 40 Property Management 150 Legal/Professional Fees 0   Total Expenses $1,967.00 Other: After three years, loss of tax-free profit on a sale.  

Fixit chalk it up as a loss the tenant rights in Illinois is something you don't want to mess with as a landlord