just my 2 cents investing in Birmingham as well - dont spend $30K+ rehabbing a $100K house unless you're going to substantially increase the value. no need for fancy expensive finishes such as granite, new tile showers, custom cabinets,etc. 

In this area, even if you got a judgement for a substantial amount you would still need to cover the cost and then wait for them to pay.I am sorry you are going through this, obviously you are doing this to bring income in, not to receive a huge repair bill.  

Being able to self-manage makes a big difference and lowers risk substantially. 

Then thought, well last year I bought a condo and started house hacking before I knew there was a thing called house hacking and it substantially reduced my cost of living there, maybe buying rentals could actually work. 

But maybe nothing would be saved if registering as a foreign entity is substantial.

You get the rent payment the day you give them the keys.I would take nothing less than the full deposit, if you start taking payments then your renter is learning they can control you, if you do take payment on security deposit, I'd make sure you get a substantial amount and no checks, money order or cashiers check.

Maybe it qualifies, maybe it doesn't.There is sufficient complexity here that a tax professional should be engaged to determine if you have substantial authority or reasonable basis to use the 121 exclusion based on the face value of the facts and the language of the code and regs.I wouldn't take a tax position here based on free advice... 

It looks pretty substantial 

It is my understanding that I will not be subject to self-employment taxes because I don’t think I offer any substantial services...

Now, with that said, if they have the ability to purchase the property and resell it- that's a different story, but most are having people take their property off the market, on a gamble that they can find a buyer, and then take a substantial amount of the sellers equity for it.