Qualified section 179 real property.You can elect to treat certain qualified real property you placed in service during the tax year as section 179 property.

The goal is to try and do 2-3 of these projects/year. when we lend we just treat them as debt deals.

The IRS also says “you can choose to treat any debt secured by your qualified home as not secured by the home.”So... this leads to interest tracing rules which are not complicated but it begs more questions-What's the land for?

In my opinion, they are treating  houses in lower cost neighborhoods like medium to high end flips, but selling to investors, which I don't believe is a viable business model. 

Treat them like the criminals they are and it stops! 

in both cases the profits (if any) are treated as capital gains. 

So you need to treat both as long distant properties.

You never know where a new deal with come from, so treat everyone with respect and kindness.

If you do go here its critical you understand the community, culture, environment and treat people with respect.

Make sure to treat it like a business and your tenants like customers.