Too many times new investors over simplify things, and look for easy formulas rather than doing the homework needed to understand the various ways properties are valued.

Apply within your spreadsheet.Obviously that over-simplifies things, but that is a reasonable approach to start with, and to refine over time as you learn.

In this simplified example, If I bought 10 houses this year, rented them out, and then sold them a year or two later, is that just passive, non small business activity, just personal investment, or is that considered small business activity where I would owe the 15% tax in addition to my income tax?

I like the idea of including all utilities in the rent as simplifies the accounting and minimizes any tenant-tenant squabbling.  

.$400k x %20 = $80k down payment to close (ignoring closing costs and repairs) Now its up to you to figure out the expenses of the deal, including your mortgage payments. lets say if you are renting for $3000/ month, its not unreasonable to assume you could take home $1k per month after expenses (I am simplifying dramatically for time's sake).$12k gross for the year on a $80k investment = %15 cash on cash in the first year if everything goes perfectly.

If you're utilizing this software that help simplify the rental process, along with setting enough time aside, I'm sure you'll be surprised with how many properties a single landlord can manage. 

Even though you have a sizable asset we can't lend on that asset base unless it would support the housing payment and other expenses for the length of the loan (slightly simplified), there are loans for investment properties that only take the cash flow of the property, but those require landlord experience. 

@Blake SpeckAgree with Kristina.Here's an easy way I've used to get all my tenants to pay on the first, it simplifies everyone's lives including my tenant's (easy to remember the 1st).

We currently own a 14 unit apartment building and self manage, but all the units being under a single roof I think helps simplify things. 

For example, suppose you are considering three identical properties that rent for the same amount (yes, this is an over simplified and contrived example!).