While I don't see it on the IRS tax information, if I remember from the conversation with him, I think you have to buy properties that need significant improvement. 

Consider properties with value-add potential to boost rents and improve cash flow.Good luck!

By this time next year, we aim to have invested in our first rental property and improved our credit, setting a strong foundation for a successful and fulfilling future.I am open to any knowledge or advice anyone has to give as I am currently learning about real estate investing. 

If you could stomach the negative cashflow or get creative holding is not bad.

Playing it safe might mean walking away if the numbers can’t improve.

Further, he can improve the real property to realize a higher sale price.  

We got bank financing for the land purchase and contributed (almost) enough cash to complete the improvements.

Everything else, I'd invest in assets that have the potential to appreciate in value (can be improved, are inherently scarce, etc) or generate strong future cash flows.

Address basement concerns by improving the shower usability and adding soundproofing.

Increase Your Cost Basis: Document and include the costs of significant improvements made to the property in your cost basis.