I plan to hire someone to do the renovation, but I planned on coming up with some sort of vision for them to go off of.

However, it may make it harder to fill the common equity piece as the more preferred equity there is, the less desirable the common equity becomes because of risk of loss.

I'm looking to offset rental income.I can't take a passive loss against my W2 income.

If rents do not increase above $1900 that a loss if they do increase it seems it might be a low NOI.  

You would not be able to exclude it from your DTI until you filed with it on taxes (assuming you did so and did not report a loss). 

Equity investments can suffer a 100% loss—the FDIC doesn’t want to pay this claim.2.

In the end, in this REI business you have to have a gut instinct that prevents you from doing these kinds of things, if you don't, you are going to have a lot of loss in REI.ARV might as well be a unicorn in this situation as clearly was not reality. 

You can continue to invest in real estate and create more depreciation losses via cost segregation to offset the recapture though. 

My vision is to someday be in a place where I can be in a greater position to give of my time and resources to others, to help them and be a blessing to them.  

My CPA had some very simple questions about how to handle passive losses and RLS refused to weigh in on the situation whatsoever.