In the early days I bought some drug houses and had a squatter or two.

Full disclosure, I have a background in mental health and addiction treatment so I may be in the minority here.

.- If the investor was just loaning the money to the contractor for fixed returns, then the tax treatment would be different.

They do not have to do anything, but usually gun and drug related charges bring a quick boot from the program.

I am interested in purchasing a 2 or 3 unit building, but I aa concerned that this area has a drug dealing problem and might be expereincing moire floods than normal

It has all to do with the risks associated with an investment vs. the almost guaranteed returns from paying off the debt.Note that when you do the math you do have to adjust for the tax treatment if you really want to be precise about all of this.Coming back to the initial point.

When you have a deadbeat, your property is often already damaged due to the filthy way they live and the drugs and alcohol they abuse and the poor choices they make.

This book store is subject to "unrelated business income tax" on the profit from the bookstore even though the university is a non-profit entity.An traditional IRA falls into the same treatment.

If the property you sold is investment or personal use property installment sale tax treatment applies to the portion of the sale price that you finance under both accounting methods.

. :) But seriously, there are so many traps to SDIRAs in RE; every SDIRA file I've reviewed the client / potential client has done something that would likely invalidate the tax treatment of the entire account on audit.