The tenant asked if he could paint the backyard patio and driveway (we have a rear entrance for cars from the alley). I said yes, and he mentioned that he would deduct the cost from the rent. I replied, asking him to ...

We will cut them loose if we have to, but I think the old landlord just made it too easy for them.  

Tax benefits can help make a better business deal, but a bad business deal is hardly ever going to break even just because of tax benefits.The other big consideration you should have, in order to actually benefit from real estate fueled losses or credits, it will require a substantial investment of time - either to get over the material participation thresholds for short term rentals, or to get over the real estate professional thresholds for mid term /  traditional rentals. 

I was considering going into real estate investing because I would like to cut out the middle man ( the broker that is) lol and have some diversity with my license, not just helping people buy and sell houses.

I don't self-manage this property which definitely cuts into my profits, but I'll still consider this a win for now because it's appreciating at an average rate of 9-10% a year.

If you go forward, make sure they handle all maintenance & repairs on the property too because these organizations typically have in-house staff..Snaking toilets, repairs, grass cut, snow removal, paint...Make sure you're covered with insurance as well. 

The Tree cutting issue was discussed in more detail on another post intitled "Unlicensed Property Management Company in Jackson Mississippi".

You can cut the house off on 5 acres and sell for a little less than you paid for the total ($150,000 less). 

I'm just saying that there are multiple factors involved and the numbers are just one of them.You are obviously not cut out for the RE game, go start a business or something.

But I would say “Consider your timing.”Real estate is expensive right now, and money  is expensive right now (APR wise).The fed is expected to start cutting rates later this year.