In the past, RentingFamilyMember has filed Schedule E and apportioned expenses by rental percentage, including mortgage interest and real estate taxes between Schedule E and Schedule A.

Sellers motivation shouldn't factor in what you can afford, thats a bonus if they will negotiate, but your numbers have to make sense to you and work out for multiple exit strategies (str, ltr, sell etc)Running the purchase numbers is pretty straightforward, use almost any online mortgage calculator, make sure you know taxes and insurance (taxes will go up a bit if it is currently owner occupied and you don't plan to live in it) Once you know your mortgage amount then start looking at other STR's in the same area and same size/amenities and see what they are getting per night and how many nights a month they are rented to calculate what you MAY be able to get.

I live in Spring TXfor reference my mortgage, taxes, and insurance are $1840 each month, $385 per year in HOA fees 

Since you have a good W2, why have the cash flow to report income and pay more taxes on?

This will be my first rental property so want some advice.Purchase price - $195KDown payment - $59,176 (25% plus other closing)Annual rental income - $29,424 ($2,452 a month for 4BR)CoC return 10.7%Cap rate - 9.7%; Price to rent ratio - 6.6Cash flow will be over $5k per year after paying taxes and mortgage.

I am thinking Austin TX might be a good place to start due to the state's tax incentives and the recent decline in prices.

Some easily verified facts:- San Diego appreciation has been great - San Diego rent growth has been great- prop 13 protects against exorbitant property tax increases- San Diego has one of the lowest eviction rates in the country- San Diego has one of the lowest delinquent rent rates in the country- San Diego has a very low vacancy rate- historically for long holds, San Diego has produced near top in nation return.  

I'd like to one day find all the deeds on the property going back to 1857 just to get a more accurate picture. 43 years: 4,400% gain (annualized 102%/year)26 years: 144% gain (annualized 5.5%/year)6 years: 47% gain (annualized 7.8%/year)Besides Real Estate where else can you see these kind of gains, tax benefits, and leverage?

He was referred to me through my CPA, whom I also feel is worth the $425 I pay for her office to prepare the taxes and who has set me up on Quickbooks. 

Regardless, you sort of need to take two steps at once: A) talk with an attorney to understand your options and nuances of those options and B) start having conversations with people you might think would invest with you to understand if there is any real interest, what they are looking for and if you can realistically offer that to them with what you are doing.Once you have that, then you need to understand underwriting with investor capital, proper fees and profit splits, taxes, reporting, etc.