I am also an engineer (mechanical) looking to generate a passive income stream to supplement my day job.

My plan is buy and hold, as I want income to supplement retirement, which is in about 10 years.

If the roofer charges more, you would submit a supplement to the claim to try to get the additional money. 

I have a fairly decent job and I own a rental property that helps supplement income also.

I have a fairly decent job and I own a rental property that helps supplement income also.

Rental income should supplements your W2 not replace it until you are making more money than you can use.

The sellers are a retired couple that will use the home sale to supplement their pastor's retirement.  

The sellers are a retired couple that will use the home sale to supplement their pastor's retirement.

I would be selling it asap.Your only upside is speculating on appreciation but keep in mind you will need to supplement your tenants rent to make it work.$470 K in equity is costing you lost opportunity income of $3900/month (10% value).

If you have high earned income and can funnel some of the extra money into your passive real estate business to make repairs etc that supplements the passive cash flow, can you still write these expense of as business deductions, even though the money came from your earned income?