I hope that someone who is actually doing this actively will chime in. 

Thanks everyone for the quick feedback and I would like to apologize for not keeping this post active as I had to travel overseas and just now getting back into things again. --  I have reached out to the PM and he has reduced the price to a more competitive rate but it still hasn't found suitable tenants. 

So, in this case, you get the best of all worlds - enjoying the most favorable cash flow situation that you can muster (the less you're dipping into the HELOC the better) - but if you pick the right opportunity you will also get the chance to actively manage some value add project(s) to a property that you're already living in.If you're married to your current house and living situation, fine. 

@Phyllis EffahI would look to forming the LLC in Alabama as that is the state that you will be considered doing business in.While CA does have a $800 minimum tax; you may be able to potentially avoid having to pay it.This will depend on the level of activity of your partner/member who lives in CA.If he is a non-managing member and doesn't make any decisions regarding the LLC; it can potentially be avoided (money partner).

If there is 30K in here when the partner wants to leave,  their share is 10K. iii) Value of future cash flow-This is the prong that I am seeking advice/guidance about.

I've been active as a buy-and-hold investor in Birmingham for an year now, and will echo @Rob Drum's sentiment that Birmingham is an excellent investment market.

Hey @Lindsay StewartI been to many REIA meetings and this is usually packed with deals and people who are actively in the business.

Also you may be in code violation for allowing a bedroom in the basement.You need to become more active in protecting your asset.

Generally, you would report in the Schedule C if your income was related to activity that is generating ordinary income (such as Flips).Unless your income (AGI) is greater than 150k, you should have been able to deduct the Losses from your rental activity.

Through a combination of active and passive RE investments, and fortunate increases in income from existing RE investments, this goal was achieved.