The majority of these tenants are not established and are just trying to figure out if they have a viable business proposition and are trying to do so outside their personal residence.  

I would first figure out why the current owner wants to sell, why is he/she jumping ship (too much maintenance, upcoming STR regulations, poor returns, etc.). 

Did the LLC have enough income and established history so you didn’t have to guarantee the loan?

I have a lead on a lot in a well established residential neighborhood.

You may also talk with other operators in the area and get their thoughts.And as mentioned above, zoning regulations will dictate what you can and cannot do with the property.

However, I don't see where in section 121 it would address the situation I presented (which is based on the premise that co-ownership was already established and there is now an increase in one party's ownership...). 

The next step is to go out and look at a number of properties together back to back as an educational exercise and to establish a bse line for what a deal looks like.

Each area has it's own set of rules and regulations as well as dealing with local HOA fees in each neighborhood. 

Best, GaryEvery state is different and Commercial property is different and most laws regulating residential do not apply to commercial.

A third option would be to consider a Private Lender which is similar to a Down Payment Equity Partnership except that you don't establish a business partnership with them.4.