The house in question is located in West Milford, NJ and is a 1963 3 bed 2 bath split level on a pretty level .25 acre lot right outside of town center with natural gas but septic, well, etc.

So lucky for you partnerships dont actually need to be filed with the state, they can even be oral in nature.

I had hoped that the natural draw of Disney etc would work in my favor but there's just too much inventory.

Typical assumption is that security deposit would 100% go to cover property damages - that's the whole nature of the deposit IMO. 

Much like there's "organic" produce and "certified organic."

It provides housing when we have limited supply, it's a good way to find tenants and make friends, and it produces a great ROI (if managed correctly) because the rental income is generally higher.

E.g if an architect produces an interior design set of drawings anyone off the street could submit they would be required to stamp and sign them anyway.

You are thinking real estate investing is an income producer, but when you have limited money to invest that means your potential profits are limited as well.

As others have pointed out, interest income from a partnership can be classified as either "portfolio income" or "ordinary business income," depending on factors such as the nature of the partnership’s activities, the number of loans, and whether the interest is incidental to your main business or a core activity.

It typically takes 4 to 6 months to produce on a part-time basis and my intention is that it will be of value to those in the industry, including me and a prospective mentor.