If operated correctly, it nets 20% plus a salary for the operator.

I see no way your ROE calculation is correct.

Yes, you have read that correctly.

I agree that the drainage issue is something that you may want to look into correcting asap because it could result in mold or further damage.

House hacking with the first property would be nice if I can find the correct space and deal. 

is that correct.. then your taking on pretty big risks regardless of accrued interest or not.

One group that comes to mind raised $140mm from, if I recall correctly, about 150 investors.  

Plus, when done correctly, you as the KP can capture the ALL the Fed investment Tax Credits (ITC) plus the  State, MARCS, and Cost Seg Depreciation to massively offset your High W2 / 1099 Income - I wrote a book specifically for people like you and your wife to address your concerns. 

The LLC structure gives more control to manage the tenants if I remember correctly.  

G'Day Matt,You can only do so much with online research.IMO the online stats and demographics often times don't paint the correct picture.This especially tends to be the case for tertiary markets.Finding folks on the ground that "live and breath" the market is your key to success.Those folks on the ground are the one's that bring the "online stats and demographics" to life per se.They will know more accurately what's going on in their local market pretty much on a daily basis.I've always said that you can research online and find a market that has the best growth and cashflow potential.Find a property for a great price and on a great street and in a great area.But if your property manager or contractor are incompetent or cheats.You will loose money.So start with finding the right people first before finding the right market or deal.Just my opinion.Thanks