In addition to my full time job, I've got 4 kids under 10 at home.

An additional benefit seems to be the ability to pay my kids out of the LLC so that they'd also have some earned income in order to start contributing to their own retirement accounts. 

As you are aware, the long standing tenant can get a lawyer and assistance from the housing rights advocacy agency.Which could cost you court fees, relocation and additional FREE rental occupancy for the tenant ( judges do this a lot). 

Of course, the differential in return needs to be meaningful to compensate for the additional risk of a stake in a flip transaction and the tax filing overhead.  

The end goal is to have a substantial amount of passive income as well as build equity, to have additional security for my family in case something were to ever happen to myself or my job.  

Get the income first, then explore ways to reduce the taxable portion.My $0.02 ...

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I want to make sure the tenants get their deposits back in addition to a sum to leave the property in 30 days.

The additional amount could be due to the lack of payments, legal fees, a possible refinance, and/or home equity loan.

Some additional info that I hope addresses some of the questions:@Cory LaChance I actually refinanced under the 3-month mark (see the timing listed on my original post).