The proper route to take is based off your plans for the home, how long you will keep it leveraged, etc.

Assuming one has the cash to repair and furnish properly, the big challenge is MANAGEMENT. 

You may be able to get them into an amazing walkable neighboorhood while paying 0 in rent and affording them a superior lifestyle balance, also possibly freeing their income to make stronger investments with you. 

And ask them to ensure they are disposing and putting their cigarettes out properly to avoid any future occurrences.

Good, and possibly great NOI and you are usually able to collect rent consistently if you've screened the tenant properly.

In later years, as your loan balance is paid down and your equity position increases, then return on equity tends to decrease. 

One red flag and you reject. 4 unrelated adults...no way.You need to study how to properly screen.

@Andrew MerewitzState of LLC FormationIt is normally advised to create the LLC in the state that you will be holding the real estate; Florida in this case.If you created the LLC in New York - you would be required to register the LLC in Florida; increasing your total costs.Please also be advised that it can be costly to form an LLC in New York.Location of CPAThe important aspect of looking for a CPA is that he/she understands the taxation of real estate.Technology(emails, phones, skype) allows you to communicate properly through an accountant eventhough he/she may not be in the same city as you.Florida does not have a state income tax.

I'm not saying this is a bad deal, but you just have to do the proper due diligence.

Learn to control both sides of the equation and you will be amazed at how fast your balance sheet will grow.