Additionally, the property includes an outdoor swimming pool.The use of the accelerated depreciation strategy helps real estate investors to reduce the tax liability immediately which therefore increases their bottom line due to the offsetting of income.

You mentioned W-2 income as part of a way to save on taxes. 

I agree with finding quality comparable properties and basing your income off these.If there aren't any, why is that?

Some background:I got into REI to earn enough income from rentals to replace my W2.

We continue to manage properties and generate income from Upstate, NY, while also running a real estate syndication with deals and properties across the entire country.

Seems like you are only 1-2 properties away from potentially replacing your civil engineering income.

As you alluded to, sometimes a passive note investment purchased for monthly payments “goes south”, and becomes an active participation investment, with plenty of additional capital required for legal fees, forced place insurance, and property taxes.  

Are they going to be able to buy your proudly done flip.3) If you misjudge the market, do you know when to dump it.4) Can you put a spreadsheet together on your purchase costs, carrying costs, rehab costs, closing costs, selling costs, tax costs, contractors that don't show and delay your project etc. etc. etc.5) Is the return worth the risk.

You would have had to be there for at least that to save on the capital gains taxes (up to 250k). 

Ask yourself, why would the federal government pay MORE than market rent and waste our tax dollars?