To me, this loss is nothing more than a bad Vegas trip.

Are you aware of grants or low-interest loan programs that I could use to do the rehab?

And I made it through but  at tremendous personal loss..

Lenders typically focus on the borrower with the stronger financials—so your sister’s job, income, and credit will carry weight.

But the reality is that these banks have loans supported by bad assets that would have been been considered less valuable and have smaller purchase prices if the appraisers put more weight on the quality of the buildings.  60% of the inventory in Worcester was built between 1890-1920 so these aren't just old, they are super old.

Same for 2-years of job/income stability.Tenant Default: 10-20% probability of eviction or early lease termination.Section 8: Class C rents usually meet program requirements, proper screening still recommended.Vacancies: 10-20%, depending on market conditions and tenant screening.Cashflow vs Appreciation: Should cashflow immediately, at the lower end of relative rent & value appreciation.Class D Properties:Tenant Pool: Majority of FICO scores under 560, little to no good tradelines, lots of collections & chargeoffs, but should have no convictions/evictions in last 12 months.

Even with your current home, if renting it leaves you with a small loss but helps you get into a better investment, the long-term gain may justify the short-term hit.Finally, don’t overlook down payment assistance programs, local grants, or FHA/CMHC-insured loans (if you're still in Canada) designed for first-time buyers or low-down-payment scenarios.

REPS only changes whether the resulting loss is deductible, not the schedule.

The income/loss of the property/LLC (no matter what type of loan it is) will flow through to your personal tax returns. 

Possible loss of "goodwill' in the community4.