You have to make payments on the borrowed funds, which is then deducted from the money you are making on the investment.

Then I would have a little more equity and like you said at that point it would be a loan against an investment property which is tax deductible right? 

They are mocking these up with interest only loans and factoring back in the tax deduction as if you qualified for the tax benefits of a real estate professional and factoring in the diminished first year property tax (since its not a full year).

If they are self employed and their income on their tax returns is understated because of deductions you can use data from bank statements.

On the financial side, work with a CPA who understands real estate to optimize your tax strategy, especially for deductions like depreciation and expense write-offs.

., selling a non-grouped rental property in a taxable sale to a non-related party, both current and suspended passive activity losses generated by that activity can be deducted. 

Four properties provide diversification, greater potential for appreciation, higher aggregate depreciation deductions, and increased cash flow over time but involve more management complexity and higher leverage risk.

Deduct NEW property taxes after you buyDeduct home insurance costsDeduct maintenance percentage, typically 10%Deduct vacancy+tenant nonperformance percentage(we recommend 5% for Class A, 10% Class B, 20% Class C, good luck with Class D)Deduct whatever dollar/percentage of cashflow you wantNow, what you have left over is the amount for debt service.Enter it into a mortgage calculator, with current interest rate for an investment property, to determine your maximum mortgage amount.Divide the mortgage amount by either 75% or 80%, depending on the required down payment percentage - this is your tentative price to offer.If the property needs repairs, you'll want to deduct 110%-120% of the estimated repairs from this amount.Be sure to also research the ARV and make sure it's 10-20% higher than your tentative purchase price.As long as the ARV checks out, this is the purchase price to offer.It is probably significantly below the asking price.

Be sure to consult with your CPA to determine if you can utilize these deductions based on your specific tax situation.

Be aware of tax implications: rental income is taxed in the property’s state and reported on your California return, with deductions for travel, depreciation, and expenses.