The good news is we have $6k in the bank, and quite a large credit line available.The home were renting is of little value, there are multiple problems she's refused to fix, like electrical issues, holes in the rotting floor, broken deck-patio.  

But that entails earning ordinary income, which adds up to your W-2 income on your tax return.

Although income from the sale of inventory or property held for sale in the ordinary course of business is taxable, gains from the sale, exchange or other disposition of property otherwise is not.

If I later sell the property, is it cap gains or ordinary income?  

Businesses that don't make a profit get flagged for hobby losses....however all of these properties will see income because they are not financed.If I report all on Schedule C, the income will be classified as "ordinary" and I'll have to pay the SE tax...not to mention it will get flagged because I'm not a "real estate professional".  

Tax deferred money and earnings on it are taxed as ordinary income when the money comes out. 

I know this is tough when you are occupying the home, but take some time to "declutter" (note, your home seems far from cluttered... from a marketing standpoint, declutter means "remove personal items like family photos and cat tree") and try to take photos of the home as if you were selling it (full rooms, yard, patio, garden, etc).  

Simply because these real estate syndication deals are passive investments giving off ordinary income?

Landlord may withhold from the Security Deposit such amounts as are reasonably necessary to (a) remedy Tenant’s default in the payment of Rent; (b) restore the Premises to its condition at the commencement of the Term, ordinary wear and tear excepted; or (c) compensate Landlord for actual damages sustained as a result of Tenant’s failure to give adequate Notice to terminate this Lease pursuant to law or the terms hereof; and as may otherwise be permitted by applicable law."

I highly recommend speaking with an accountant to do some detailed tax planning.S-corp profits are taxed at ordinary rates.