@Andrew Bellini  since you're a W2 employee without any other passive real estate income, depreciation losses from RE syndications can't be used to offset your ordinary income.

It's worth pointing out that OP originally mentioned investing in 401(k) which would mean interest, dividends and capital gains are deferred until the money is withdrawn (usually after 59.5) And then, any withdrawal is taxed at ordinary income.

Then google "2012 tax brackets" and figure out your rate.If the net taxable income is negative, you may be able to use that passive loss to offset some of your ordinary income.

Multi-family depreciates on the same 27.5 year schedule as 1-4 unit residential real estate.This combined with using the whole amount invested plus the loan as the basis for depreciation shelters most if not all income for most investors.REIT income on the other hand is typically taxed as ordinary income (which for a California investor at the top tax rate could equal as much as 52.9%).You also wouldn't be able to take advantage of the 1031 Exchange if you invest in a REIT.

For example, you may want to instruct them to email you for ordinary questions and text/call for emergencies.I also schedule a mandatory inspection within one week of purchase.

Catch up provisions aren't included in every offering, but they're certainly not out of the ordinary. 

However, if you are transferring some of the proceeds from the rental business into the property management business you are essentially converting some of the income from rental/passive to ordinary income.There are Pros/Cons for doing thisCon - Your property management income will be considered ordinary income subject to self-employment tax.Pro - You may not be put a portion of the property management net income into a retirement account.Con - You may now need to file additional forms with the IRS increasing your accounting fees.You may also need to file a payroll tax return.Pro - If your property management company runs as a loss and you were not able to take the losses on your rental business - you may not able to take some losses there were previously unavailable to you.

But even if you only slow down the flip to more than a year that changes the taxability from ordinary income to capital gains.There are three things to this strategy.1.

Does it all equal out in the end because we are getting to write off the mortgage on our primary residence off our ordinary income or does it make sense for us to have a loan on the investment property itself?

The rest are ordinary people as others.