It earned about $35K a year, which combined with is retirement and social security benefits, provided him with top shelf top shelf living facilities - assisted living and then memory care.  

But what difference does it make if the leveraged portfolio earns an insufficient risk adjusted return?

I did not care about the interest rate much because I am thinking banking is like a leech sucking up your hard earn money.

So after a long and healthy Tech career I thought it was time for a change.

You are required to file a complete and accurate return, which means reporting the income that you earned along with atleast the direct expenses that you incurred on your rental.There are two comflicting forces - Your tax accountant wants to be aggressive with deductions because it will entitle you to paying less taxes(now or in the future).Your lender wants to see as much income as that will increase your Debt to Income Ratio(DTI).The good thing is that you can speak with your lender about 'one time expenses', that were only incurred in that year and are not reoccuring. 

The Seller’s earnings are around $300,000 for the past 3 years.

you have to calculate the interest costs.and.... it makes zero sense whatsoever to buy something turnkey with that much leverage. none. you'll never, ever pay back the HELOC with the non-existent 'cash flow' from the property.just trying to be realistic. the market is unforgiving right now.would there be any tax benefits for loss of income on property to offset high w2 earnings?

In fact, given the start up costs, the best way to make a profit as an MTR is to earn the continuing support of the property owner served.  

Once I gave in and bought a few only to not have assistance and no clear direction so frustration took over and I was still learning but needed direction, I finally found a group of investors to help me,  guide me,  and teach me the ins and outs of the industry.If I am not working deals learning the ropes or watching videos for extra information in real estate investing you can find me at my full time career as a Auto Injury Claims Specialist with big red.

Agents can earn tons very quickly if they're savvy.