Tenant Labor and converting rental to flip

[Tracey Hamilton]

We just picked up our first property.  We are in Oregon, and we are licensed general contractors.  Initial plan was to rehab and flip the property before the end of 2018.  

We are seeing issues of needing labor help, but not excited about getting workmans comp and running our own payroll, nor excited about paying for employee leasing service.  

Personal friend is wanting to come stay in our area and learn a little construction.  If we rent the home to him, and he lives in it (legally, has utilities in his name, etc.), as a tenant, he can do work on the home without needing to be an employee, correct?  As long as he has the homeowners permission (that's us), he can climb on the roof, remove windows, etc, right? 

Next issue would be once he is ready to move on and we're ready to now sell the house.  IF that happens after 2019 starts, I can see how I'd run the accounting pretty easily - 2018 as a personal rental and 2019 as a conversion and sale.  However, if things move faster, and he is out and we sell during 2018, do I try to separate out the income/expenses/depreciation from when it was a rental, adjust the basis, and then figure the sales profit off the adjusted basis? 

Just to throw another monkey into things, the property was purchased and is currently held in our personal names.  We had thought about having the business (the general contracting business) purchase it before we started the rehab, so as to separate out the dealer status business from us personally.  I'm thinking maybe that should happen AFTER the rental period is up.  

My brain has been swirling with all these issues and possibilities all night, haha.  As if making sure I have all the custom window sizes correct wasn't enough, ha!  

Thanks!