Does the 50% rule include only operating expense, or does it also include debt coverage and taxes as well?

If you actively participate in your passive businesses (actively participating in a passive business is different than operating an active-income business), however, you can deduct up to $25k in passive losses per year against your other income, provided that you don't exceed the income threshold.

But until that point you have to just grind it out as a sole operator doing what your doing.

(I plan to keep all deposits, and operating funds separate from my personal accounts and in their own respective accounts.)When setting up new bank accounts, is there a benefit to using a bank local to the market you're investing in? 

From the formula, we know that cap rate starts with NOI (i.e. revenues minus all operating expenses).

Umbrella insurance is much cheaper.One last thing is if you operate thru S Corps and LLC's when you get insurance, make sure to get an endorsement covering you personally as well.

For me, I am trying to minimize risk by saving some of my cash for operating capital. 

They are not as aggressive on dollars but pricing, flexibility, service, operating covenants, and certainty of execution are better than both Agency and CMBS.

I grew up in the construction industry (father owned a construction company, and brother is still operating this company today).

From my interpretation a single member LLC(if operated 100% like a business) should afford you the same asset protection rights as an S-corp.S-corp is also a "pass-through" entity...so his counter argument should be null there.If someone is going to go sue you - they don't look whether or not you filed a tax return.Again - i'm a CPA so I wouldn't take legal advice from me.You should get back to the EA if he knows personally anyone who was sued personally for an act that his/her LLC did