I would advise you read an annotated version of the book "A random walk down Wall Street". 

Hi AlWelcome, this is a hard question that could take hours and pages to answer but here is my short version, I hope it helps. 

But I'm sure I could tell a good version of the lessons I learned, after the fact.

FannieMae publishes their underwriting guide, Dec 2023 version:  https://singlefamily.fanniemae.com/media/37656/displayIf we scroll down to page 388, there is a section "B3-3.3-03, Income or Loss Reported on IRS Form 1040, Schedule C" that says:The following recurring items claimed by the borrower on Schedule C must be added back to the cash flow analysis: depreciation, depletion, business use of a home, amortization, and casualty losses.Now compare the above to the list in this OP post.

At that point, my thinking was that the home would be a great rental as  inventory in the area tends to be very limited.Short version of the situation is that the subdivision's HOA allows for only single family owner occupants. 

Like every business, there's a luxury segment, and a discount, $1 store version.  

Can any gives me the laymans version of this. 

I got the audio-book version of both of them.- Wheelbarrow Profits: How To Create Passive Income, Build Wealth, And Take Control Of Your Destiny Through Multifamily Real Estate Investing - by  Jake Stenziano and @Gino Barbaro- Crushing It in Apartments and Commercial Real Estate: How a Small Investor Can Make It Big -  by Brian MurrayBrian is also a guest on 2 podcasts here on BP: Shows #212 and #126.

ETFs like SPDR and Vanguard are popular and they have versions you can buy that are more heavily weighted with aristocrats that yield better dividends. $6-8M portfolio in one of these will yield $200-400k truly passive dividend income.

@Rudy Planter There's also the audiobook version, if that's better for you.