I thought those revenue rulings you mentioned were superseded by more recent Treasury regulations (TD 9107). 

Now, as @Lane Kawaoka mentioned, you can get a larger loan of over $1mm and then qualify for Freddie Mac SBL or Fannie Mae.

You didn't mention this, but re-financing into long-term financing will significantly increase your ROI/IRRWhat do you anticipate the vacancy rate to be?

This will not require an additional tax filing requirement of a partnership return.Instead you and your partner would each report 50% of the income and deductions directly on your tax return form Schedule E.If you are looking for protection - you can obtain an insurance coverage as others have mentioned.

Here is what I know so far:- Hard Money lenders are short term, 12-18months- Rates can be 12%-15% in my area because they want to create immediacy behind them getting paid back- I'm not familiar with other fee's and expenses with a lender that you mentioned- Have multiple exit-strategies if things don't work out.

@Pandu Chimata,  as others have mentioned above, a 1031 exchange is the best way to defer capital gains taxes indefinitely.  

Not only did I 10x my goal, I will also multiplying my action. not sure why the @mentions didn't work in the previous posts...

As I mentioned, La Quinta and some parts of Indio are favorable for rentals.

I'm not sure how "well off" they are, but I'm guessing they are comfortable, as they are probably just about breaking even, if not losing money on this property after taxes, insurance, etc.They aren't marketing the place and we've never heard any mention of them thinking to sell.  

For example, if you think you can make $35K post rehab if everything goes perfectly and you get the price you believe you will get, then getting $30K for a quick as-is sale (more than likely to an end user) makes more sense and takes away the risk of unexpected problems during rehab and/or the appraisal issues I mention.