In Texas, there’s no state income tax on rental income, but LLCs have formation and annual fees.This post does not create a CPA-Client relationship.

Transcribing transactions from bank statements, posting transactions to the correct accounts, and then manually creating an income statement, statement of owner's equity and a balance sheet is a fairly time consuming process and I have not been able to keep up with the book keeping between my regular work responsibilities.What accounting software do people recommend? 

Hopefully, you find it helpful and qualifies us to assist you with your goals:)---------------------------------------------------------------------------------------------------Recommend you first figure out the property Class you want to invest in, THEN figure out the corresponding location to invest in.Property Class will typically dictate the Class of tenant you get, which greatly IMPACTS rental income stability and property maintenance/damage by tenants.If you apply Class A assumptions to a Class B or C purchase, your expectations won’t be met and it may be a financial disaster.If you buy/renovate a property in Class D area to Class A standards, what quality of tenant will you get?

And you'll have a solid W-2 income to help you qualify for loans. 

If you are purchasing a primary home, income could be a challenge if you work at an office.

If you pay down $100K in loan saving you $1K in monthly costs against rental income, or you invest that $100K in something that generates $1K in net income the result is similar.

Loopnet has some comp information, but requires a paid (and not cheap) account to see it.Commercial properties are generally valued based on income, not comps per se. 

Look into a DSCR, Debt Service Coverage Ratio, loan where the rental income can be used to qualify the cash out refinance instead of your personal income.To Your Success! 

I'd be heavily focused on mitigating that future tax liabilty rather than directly supplementing that income.

Interest income is interest income, unless you decided to roll some of the current cash into a self directed IRA at which point your interest income would be deferred for a later time and allow your funds to grow tax free.