Also check with a CPA, I'm not sure you're allowed to depreciate a property that isn't rented, maybe they have a work around.So you're comparing only projected capital gain on a property (including it's holding costs for utilities, insurance, taxes and repairs) vs the state fund. 

You can receive some rental income and then also gain experience as a landlord. 

I wasn’t considering the extra equity that I gained in my calculations and I was counting my mortgage being paid by the tenant adding to my return over time.

In exchange for paying back the taxes, my partner and I would gain 60% equity of the house and resell it (free and clear).

If the numbers work and you have sound exit strategies for the deals you analyze you will be fine. 100% agree with @Michael Ablan in that you likely wont make much on appreciation but you can easily cashflow and gain equity through debt paydown.Closing on a Triplex in the area here in a few weeks.

While I love gaining the experience, I definitely want a substantial profit the effort involved (even though sometimes there's very little effort :) )

I am also looking for a new part time job in a real estate/development field, In order to gain more experience in real estate.If your from the Levittown area maybe I can grab you a cup of coffee sometime.

So you're paying capital gains (20%) on $40,000 - $16,364 = $23,636.

That way, you get the tax preferential treatment of long term capital gains and still get to build up capital while you flip.

We have gained a lot of the lost value from the recession but we are still not back to the values we had before.