Texas is very landlord-friendly and also does not have income taxes. 

How do we minimize taxes on the profit we're making on this first home? 

There may be something called a "Due On Sale" clause.Check and see if all tax parcels are included in one mortgage or if they have separate mortgages.You have to have him spell out what he considers to be a "partial seller financing".

How would this be accounted for for general accounting and taxes?  

Taxes : Taxes have been a brewing crisis nationwide for sometime, Chicago is another prime example of a major municipality struggling under high debt load.

Is your DSCR ratio greater than 1-meaning are you cash flowing (according to the lender's criteria of mortgage, property taxes and insurance (and HOA) if applicable).

You are looking at the rent of $2,000 and mortgage (Loan, Insurance, and Taxes) of $18000 and thinking you have $200 cash-flow.

.🔹 Property Tax Relief – If your property is severely damaged, you may qualify for reassessment and potential tax refunds.

It's a balance of cashflow and wealth accumulation.One of the goals is to have tenants pay as much of your cost-of-ownership as possible (loans, taxes, insurance, etc.)In high-cost areas, any Class A or B property you buy will usually negative cashflow for the first 3-5 years, until rents rise enough to cover the negative cashflow + rising taxes & insurance.Investing OOS increases your risks because you may not know the market and you can't check on everything/everyone all the time.If you move forward with your buddies, HIGHLY recommend creating a solid Partnership Agreement!

Also, I believe the tax benefits are horrible compared to the states, but I'm not too sure.