@Brett JurgensThe "2 out of the last 5-year rule" in real estate allows homeowners to exclude up to $250,000 ($500,000 for married couples) of capital gains from the sale of their primary residence if they lived in the home for at least two out of the five years before the sale.

I do not want to police the house; the nonprofit will make monthly/quarterly visits to insure their specific rules are being followed. 

They charge what they are worth......and they are busy.Some updates; The "handyman" exemption was uped from $500 to $1000 via AB 26223 day right of recencion is now 5 days for people over 65 (asking ladies if they're over 65 lol)The CSLB hasn't imposed the 1 man company workers comp rule (so far) they're only source of revenue is our licensing fees. 

Aside from the George Foreman Grill (yeah, those things are awesome right) celebritism for sales is historically a rule of thumb to gauge hokum not quality.Who knows, maybe Pace is "different", we will see.  

Rules/policies are subject to change and selling units in some buildings can be challenging.Condos, on the other hand, typically have more lenient rules/policies oftentimes allowing for unit owners to rent their apartments immediately and indefinitely.The rule flexibility, however, comes with a price.

If this is a problem tenant who continues breaking rules, that's something you can work on later but for right now you should do the right thing and look into this.

There are some special rules with passive activity.

Quote from @Chris Seveney: Quote from @Jay Hinrichs: few things if these are sold to homeowners were the dodd frank rules rigidly followed when you did these.if they are sold to investors then DF doe not come into play.while credit and such matters keep in mind note buyers will want a 12 to 20% or more annual return..

DSCR has other guidelines, but generally the same rules will apply more or less.

Asking in the correct forum will get a better response.Read the RULES!