hello Chris, I didnt run into any roadblocks when I was evicting them because 1) it was a lease violation eviction not protected by the non-payment eviction moratorium 2) my property wasn't covered by the CARES act I didn't even think about portfolio loans being treated different from freddie fanny.

Treat a tenant how you’d like to be treated.

You did not mention the federal income tax status of the two LLCs.If both are disregarded entities, the rental arrangement will not be respected for federal income tax purposes and the real property will be treated as owned directly by the operating activity.If the operating LLC is an S or C Corp and the LLC owning the real property is disregarded, any lease agreement between the two would be respected and you would indeed have a "self-rental" for tax as Ashish noted.Whether or not you should be an S or C Corp is a great question, and shouldn't be taken lightly. 

That, plus no tenant will ever treat your home like you do, so the value may be impacted...plus a tenant in a coop will likely have to go through the arduous approval process. 

Older building with lots of opp for moisture invasion, $1500/unit/yearWell-maintained building with no major CapEx due = $1000/unit/yearRealize that turnover is a different budget and CapEx is treated diff since it's not really an operating expense.

At the same time, Dave would probably have a brain aneurysm if he knew how I structured that first deal.I continue following Dave’s advice as much as possible for my “personal funds,” but I do use some of those funds to invest in my real estate business and I treat those real estate investments as a separate business where I follow REI mindsets and strategies.

We'll plan to treat the floor with some type of enzyme that kills bacteria, but I'm also planning to run an ozone machine.Do you have any recommendations of machines you've used and for how long to run them?

Be good to all and treat people fairly!

This might be helpful:  If a taxpayer's capacity in a given activity is more akin to that of an investor, then the activity cannot be treated as participation for purposes of deducting passive losses unless the taxpayer is involved in day-to-day management.

It is OK to treat this down payment as you would a business, and this aspect of it should be treated as such IMO.