We recommend investors carry a minimum of $1M. 

Before you buy, make sure to get the latest rent roll (a breakdown of what tenants are actually paying in rent), the tenant ledger (which shows their payment history—whether they’re paying on time or carrying a balance), and of course, a copy of each lease agreement.Too many investors rely on what the seller says, which often doesn’t match up with what the tenants are doing.

Talk to your CPA / Financial planner about this option as it does carry risk!

There are many benefits to carrying a mortgage.

Also, do the aggregate losses above any W2 income get carried over to the following year?

Hello,Is there anyone that can help with a creative finance deal that involves seller who will carry FHA loan and title transfer to land/grantor trust? 

Alternatively you could use Section 179 expensing here as well, but the expensing can't create a loss for the rental and may be carried forward.

Yes, I can take cash out and try to invest in higher return projects, a sort of carry trade, but the reality is that increasing return on equity generally involves more risk. 

Basic services like garbage collection don’t qualify.Material participation: Owners must pass one of the seven material participation tests, such as:You spend more than 500 hours working in your short-term rental business.You carry out all the necessary tasks to run the business yourself.You work more than 100 hours in the business, and no one else contributes more time than you do (this is often considered the best and easiest test to meet).

@Beth Anderson always work backwards to determine a purchase price.ARV minus profit/equity minus Rehab+10-20% minus carrying costs = purchase offerThis is a simplified example, but demonstrates the concept.