I was in a situation similar to yours and I have a duplex corner unit with a natural basement egress and tall enough ceilings.

Going to jump in sooner than later after a prop in the upper Midwest closes .. serious revitalization going on and some big appreciation

You'll need to provide Entity Docs for each LLC that is a part of the transaction so that the underwriters can review them all the way down to the natural individuals/warm bodies. 

To do that, as long as you don't hit any of the standard tests (just google "material participation tests" to find the 7 tests), you are passive, and you can offset that income with your other passive losses.It will all come down to the nature of your involvement. 

As the representative for the tenant, I oversaw a remarkable six-month renovation project on a 15,000SF project that revitalized the property from an uninhabitable church to a stunning showcase car dealership.

In the past I got houses that were move in ready so I did inspections as natural course. 

And naturally the more you work with like-minded investors and agents, the more your network starts to expand and momentum is enormous in real estate. 

I'd be more concerned about natural lighting (large windows $$) and creating a space people actually want to rent. 

They may seem great on paper, but might not come to fruition based on the nature of the investmentGood luck 

You'll naturally meet  people who want to get rid of their headache, I mean house, that they inherited.