You do need to consider multi-state taxation and passive activity losses when doing this.

Don't be house poor or you may be houseless when the next downmarket, job loss, recession, or stubborn leak shows itself.If anyone is looking for advice on small software companies, or agencies, or balancing a startup during a day job, I will try to reply or answer DMs as best possible.

The nice part about real estate, however, is that since a property's tax value is depreciated over the course of 27.5 years (39 for commercial) that depreciation is considered a "loss" and counts against any positive cash flow you had.

Remember that junk food isn't the only thing you can fit in a vending machine. 

Loss of privacy.  

Between paint and flooring that are sometimes needed, and months of vacancy, it would take me YEARS to recoup those losses even with new rent increases.

Would you: A) Sell the lots now at a discount, take a loss but at least get some money back out to try and redeploy elsewhere. 

With that said, if you believe in the area long term and think that your losses in the short term will be offset by growth in the future, just know you're rolling the dice by making this play.Cashflow thoughts. 

This is pretty much how banks do things too - the idea is that not only do you have to afford your rent - but also your electric, your food, your car, your insurance, your gas, internet, etc.  

With so many options out there and with big guys spending $25000 or more per month to market to sellers, it's really easy to burn a lot of cash and end up with nothing but a massive loss.