It notifies the IRS of expected taxes on this income.Sending Forms 1099-INT as an Investor: Investors should send Form 1099-INT to private lenders if they meet two criteria:They operate as a “trade or business,” applicable to flippers and landlords.The annual interest paid on the private loan was $600 or more for the prior year.Private Lender Reporting: Private lenders must report the interest collected on private loans as taxable income, even without receiving a 1099-INT.

It is now going to May and I haven't   received money towards the mortgage and i even contributed to the utilities (silly me not wanting to get in trouble).

In my market, JADUs are regularly being removed when selling a property to achieve top price even though they can generate income.  

However, the hard part is the expensive bay area entry price - even with the VA loan, it's still difficult to find places that makes sense for both while we house hack and when it's turned into investment property if we move.

Homes rarely sell as quickly as their owners think they will, even when the owner is sure the home is priced perfectly.5.

I can't comment on the actual value since I don't know where it is actually located, but even the brand new properties sold at top value are sold to investors with the only real expectation of resale is to another investor - not owner applicant.I would suggest you be patient and don't rush into judgement good or bad. 

@John Dehn I like your idea of offering it as a closing credit, even if you aren't responsible for the charges, if you want them to buy the property that could be a good incentive to move forward with the purchase, it may seem insignificant relative to the purchase price, but small psychological things like that can have an impact on people's decision making. 

They also didn’t even get into anything remotely real estate-related until 2011.

Personally, I make my upgrades with resale in mind, even on a BRRR.

Having a lawyer review the documents would be a very good idea.These loans can default, even if the borrower is experienced and is your friend.