I recognize that but you do not seem to recognize the opposite.

So the multi's on the same side of the street are recognized to have a legally established non-conforming use or to be "grandfathered".It is possible that the seller, by converting it to a single family, voluntarily abandoned the multifamily use. 

At what point does a flip become an investment property in the eyes of a state / tax (how long do I have to hold for it be recognized as an investment property)? 

Now you still have to qualify otherwise for the loan, but assuming you would, then that's the easiest route to take.Now, to provide some context, generally speaking there are 2 main types of loans for investors: “Conventional” and “Portfolio”Conventional - I'll define these as loans that come from Fannie Mae and Freddie Mac (if you recognize those names).

This might not provide 40%-50% annual returns that some might try and promise you but the risk-adjusted returns you could achieve by doing this would far exceed the gamble of betting on one 1 or 2 fix-and-flips or making a couple hard money loans.

Even though I recognize the chance of being sued over a RE item is small, I have (and pay for) the umbrella policy.

You could gamble and aim higher like A/B+ class but those properties are at least $170-200K asking in Indianapolis.

Also being able to remove or recognize our worry...worry doesn’t help any situation and it will all work out in the end some way or another.

@Giancarlo Paone  Visit @Pat Jackson in Reno...put it all on RED (see the movie Hangover before you go so you get some good ideas other than just gambling while in NV)!

You may get excited by the possibilities of the deal and fall in love with all the passive income the property "should" produce and blind yourself to the realities that you should be ready to recognize today.