Rental gives $500 monthly income from $2,000 rent.

But with that one lender I found I am not lendable due to not having proof of income for the last two years.

K1s show your share of income or losses from the partnership, and you include it on your respective personal tax returns.Now, to your partners.

Here is some clarification:When property inside of an IRA is financed, it generates UDFI (Unrelated Debt-Financed Income), the income derived from the leveraged portion of the property. 

Being a real estate professional allows you to treat the income as non-passive, allowing higher high income tax payers to pay less in taxes.

Interest income is interest income, unless you decided to roll some of the current cash into a self directed IRA at which point your interest income would be deferred for a later time and allow your funds to grow tax free.

Quote from @Olga Daisel: @Randall AlanI agree with Randall on getting more details, $7K gross a unit btw is a great gross income.

You mentioned W-2 income as part of a way to save on taxes. 

No personal income or tax returns are required.

There are plenty of banks across the US that also have a stated income heloc (in the Carolinas, First Citizens will do up to $100k with no income verification).