If it is a non-Roth, everything eventually comes out at ordinary income rates, including appreciation which would otherwise be treated under capital gain rules.

However if this is an appreciating market, although your monthly cash flow might be neutral or negative, you may over time actually have what we consider phantom cash flow, which is gained through appreciation and tax benefits. in most cases, if you need true “cash flow” use the simple one percent rule.

And 25% of the gain is cut as a check directly to the two of you. 

I will be keeping in touch with all real estate investors to gain all perspectives. 

Opportunity Zones allow investors to defer and minimize capital gains taxes.  

You need to determine how much asset protection you gain from the LLC versus how much you lose through either paying higher insurance premiums or taking the risk of not being covered when the time comes.

But, I am not sure if it's worth buying given I will likely be losing money yearly and only gaining equity.

Do I pay taxes on the incremental gain each year? 

It sounds like a fantastic opportunity to network and gain valuable insights.

Your taxable gain / loss will be sales price less cost to sell less your adjusted basis.