We minimize/mitigate that risk by vetting the borrower and the contract language. 

You ideally want a paper loss to minimize taxes and potentially even take it further and apply the loss against other income you have as Bill mentioned in the comment. 

I think willing to pay for more modern updates/construction so that out of state maintenance is minimal.

But that assumes you have minimal equity within a LLC and you’ve operated the entity in a fashion that cannot be pierced.

I do not want spend my W2 income to cover house mortgages, to not have pressure if things like layoffs will happen, so my plan is to buy house in a good neighborhood that may have appreciation and some minimal cash flow after all expenses (management, maintenance and vacation).

Make sure to spread out your investments in various asset types to minimize risk and secure financial security in the long run.

The most successful D class or 100% section 8 project I ever ran into was in Hattisburg MS. the original owner built about 20 little stand alone units  on the property and each was built with cinder block so very minimal sheetrock inside.. concrete floors throughout with drains in the middle ( kind of like you see bathrooms in Asia and other parts of the world . 

Most people do a Quit Claim Deed for $100, or for no value, minimal recording fee.

Don't say you're crazy about selling a house in Boston. my main goal is how do I create a better life for myself through real estate. minimizing debt 

How do I avoid  Minimize my Tax Liability????