This way, maintenance, repairs, and taxes are the responsibility of the new owner, while you continue to collect principal and interest, potentially as tax-free income.I'm not a CPA, just a heads-up 😄, but you could possibly avoid capital gains tax with this approach.

I am slowly building my people around me and gaining knowledge daily.

If you were doing passive investing and just starting out, in most cases an LLC likely isn't needed.

To make matters worse, the IRS will recapture all of the cost-seg stuff that lowered your basis, which means you will be taxed on a significant gain, even though you lost money.

I'm definitely getting more education and investing in more liens, not only for passive income but as a vehicle to acquire properties as I've come a long way in my investment business and do actively buy and sell houses. 

It makes sense to harvest that gain, then repeat the process on the next investment. 

- How passive will it actually be?

This allows you to defer all of your capital gains through a 1031 exchange.Additionally, it’s important to keep in mind that the exchange must be like-kind.

I understand that how you structure your business could benefit from tax strategy, but how many ways can you buy or sell a property to avoid capitol gains, etc, unless you're doing a 1031 exchange?

Greg Scott is correct, you will have to pay capital gains tax on any monies you take possession of.