The end goal is to have a piece of land with multiple houses: one for my growing family but also a home for my mother in law.My mother in law has agreed to foot the money on a new property/land up front and when ready we can buy land from her to build/develop etc. 

Factor in carrying costs (utilities, taxes, insurance).2.

Those are some factors that will determine your returns.

Lenders get paid at closing.Consider developing a better process to find and vet your lenders, Torianne.

I also have rentals in Detroit that I get far higher rents with cash paying tenants than I would a section 8 tenant.There are a lot of factors at play and the answer to "why would the government allow our tax dollars to be spent this way?"

In the future, we aim to get into fixer-uppers, development, etc., but for now, we like to only consider semi-stabilized (with minimal deferred maintenance) or fully stabilized, cash-flowing properties. 

An LLC is potentially one minor factor that might contribute to the evidence that you are running your rental activity as a trade or business, but it's definitely not required that you have an LLC to qualify.

This is a long term development opportunity.

Does size of mortgage paydown become a factor here?

If your goal is passive income, it's not going to be in New Jersey when you factor in cost to purchase, management costs, and rent to price ratio, but what you can get is steady appreciation.