I am curious about this nature of the business as I build my REI business.

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

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. 

Keep on scaling with adequate reserves until you hit your point where you no longer want to grow.

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. 

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

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

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. 

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.