You can offset other passive income of gains with depreciation from your long-term rental.  

Avery Carl's Book, 'Short-term rental, long-term wealth' How did you find this deal and how did you negotiate it?

So the best solution is to buy a house needing extensive renovation for cheap and use that discount to change the layout when you bring it up to living standards. 

If you do decide to start flipping homes- as a new investor you can either self finance with all cash, or you can contact a commercial lender like myself and expect terms to be 75-80% of the purchase price with 100% of the rehab financed through a draw.

Being out of state, I would suggest vetting your "team", meaning find an investor realtor, lender/s (hard $ / long term), property manager, contractors, etc.

Rental properties come in several flavors... short term, long term, etc.  

We all wait with bated breath for the extensive thank you note they will write on their way out.

Personally, I wouldn't offer SubTo or a Wrap, For reasons I've written about fairly extensively. https://www.biggerpockets.com/forums/70/topics/1227199-the-m...However, I would sell on "Lease Option" and that may work for you.

@David F.As Russell mentioned co-ops are probably 1/2 the price of a condo and you would also have extensive costs to set up a co-op and typically it’s my understanding the builder funds the first 1-2 years of reserves.

I tend to shy away from homes over ~20 years old to buy and hold for long term renting.