Bonus depreciation will finally be phased out in the 2027 tax year This is well said

The 1031 exchange is what allows them to do this without having to pay tax on the gain or depreciation recapture. 

Since you're focusing on affordable markets in the Midwest and South, it’s important to verify rental demand, property taxes, and local landlord laws.

Here's a good breakdown of your options for tax collecting starting Feb 1 based on the new regulations.

Your actual property taxes alone on that will be over $10K a year in 2025 and don't forget about that supplement tax headed your way.I would suggest keeping the others and maybe changing to LTR if that will give you consistent cash flows.  

You will need to save that initial income to buy your first properties, get your mortgages, etc.You don't need a college degree to swing a hammer, but that psychology class could come in handy negotiating with a difficult tenant.

Quote from @Zachary Kessler: Hello all I’m currently hacking my house that has an ADU dwelling that generates income, I bought this property intending to leave and rent the house that I currently reside in (2 bed 1 bath) I currently have a very good interest rate locked in here from 2022 that I don’t want to lose or have my mortgage called due from leaving here, I live here for very cheap with the income from the ADU.

Think About Future Value & Target Demographics•Check the average income levels in the area.

@David LewisRecommend you first figure out the property Class you want to invest in, THEN figure out the corresponding location to invest in.Property Class will typically dictate the Class of tenant you get, which greatly IMPACTS rental income stability and property maintenance/damage by tenants.If you apply Class A assumptions to a Class B or C purchase, your expectations won’t be met and it may be a financial disaster.If you buy/renovate a property in Class D area to Class A standards, what quality of tenant will you get?

If you sell it, you get $250k single / $500k married exemptions from capital gains.Speak with a tax professional about how much you'll save in taxes by doing this.