To counteract the taxation issue, sellers tried selling the rental license separate from the house since the value of the house was not in the houses itself, but in the rental income they bring in.

On the next deal, maybe see if their is something that can counteract the loud road noise that cannot be found in other homes in the area.

I think it would be much harder to attract quality tenants to a neighborhood that shows obvious signs of decay and neglect.

I'm a big fan of cash as I can see how loans and interest, along with fractional reserve banking is a factor in societal decay....but that's another topic on it's own. 

But the counteracting force is technology.

Zombie-companies — Macy’s, Boeing, Exxon Mobile, Delta Airlines — decay in record numbers while enduring a slow, gruesome death.

I think a lot of new investors look at the allure of STR and see the big revenue numbers and forget how much damage your house and your furniture and your furnishings will take with guest after guest after guest staying in your houseIf you let your house and the furniture and the furnishings fall into a state of decay, what originally started as a big moneymaker will instead become a constant source of guest complaints and bad reviews and headaches and sleepless nights (for you & your guests!)

Is there a way to prove rental income from my first property to counteract that debt?

I am planning to house hack my current house to counteract those bills. 

If you don't see any major signs of settling, decay, wood rot, water damage, etc, you're probably ok.Kevin