I use Cap Rates as a quick way to judge a property to see if I should go the route of running the stack of numbers. 

It's like getting busted for putting together a drug deal and then arguing to the judge that you were not dealing drugs but rather "facilitating the sale of a baggy" which just happened to have drugs in it. 

Would either sentence be any different to a judge?

The risk that I see in all states is them declaring these transactions to be net listings.

The reality is when you go to landlord court, if they show up, the judge WILL give them a chance.

Of course, you may not have used the standard lease agreement with this tenant, but this how the LTB wil judge the situation.A question for any Paralegals reading: I wonder, if you had a different agreement with the tenant, how would the LTB judge that?

If you don’t like this tenant and think they will continue to pay late/never and disregard your late fee notices, I recommend you immediately mail your notice to increase rent as of 3/1 (subject to your lease 30-60 day notice requirements, I believe 10% is the max a judge will support) and to add a waiver of partial payment = you don’t lose any eviction rights and the late fee keeps ticking until they pay you.

Is he going to declare a percent of the rent collected as income to himself?

All the standard tricks to make a property look nice without spending the bucks on it simply aren't going to yield the best returns to those eyes judging your work -- this is not a retail buyer.Could you get lucky outside the sweet spot?

Sacramento might shift "purple" in the next decade or two due to the Bay Are influx, but judge appointments (eg, those who preside over eviction proceedings) are long term and don't cycle out particularly frequently.