I was going over his financial information and saw that the guy was making over $50,000 a month and asked him what he did.

Imagine making millions of dollars over the course of your career and then having to pay 30-50% every year to uncle sam instead of compounding that cash over time.This is exactly what real estate professionals have learned to mitigate.To reduce their taxable income, they just buy a building every year, do a cost seg, and use depreciation to reduce their tax liability dramatically.Their personal wealth snowball grows much larger and much faster than their W2 counterparts who give most of their money back to the government each year.Following this strategy as a real estate professional is one of best ways to end up with a much larger net worth at the end of your career.

I have not received any return on my money. 

What makes this a good deal?

That makes your bookkeeping easier, and it can also provide liability protection if you hold title in an LLC.

Wouldn't hurt to consult a tax pro just to make sure there isn't a more tax effective strategy but I don't think lending provides any tax shelter.

After 45 + years as a real estate investor, broker, lender, fund manager and syndicator, I’ve become aware that the “dream” of many investors and investor “hopefuls” is to be able to generate enough cash flow to live off their real estate holdings and accumulate enough wealth to make “work” optional.

An example of this would be mixing your personal money and LLC money in the same bank account.3.

So if you make you buy box too tight, you will find very few deals that will fit your buy criteria. 

The predicament we are in is the property is not in the condition to charge that much for rent and we would also leave a lot of money in the deal once we refinance if we cannot get in there to fix it up.