This negative position can consume years of cash flow to recover.

Our portfolio currently cash flows, but cash flow isn’t our top priority right now since we plan to use this portfolio to supplement our retirement in 12 years when I leave the Army.My biggest challenge is committing to an out-of-state market.

Use the funds to buy 1 -2 LTR rentals cash or use a loan and get 3 - 5 LTR's.

Which do you think a tenant will pay first - their car or rent payment?

Also any tips for automating this as much as possible and how to protect the property financially and property management would be appreciated.I ALMOST understand the rental arbitrage strategy if building a company scaling with say 30 + units and looking for high short term cash flow.  

Do the math and see if an ADU is worth the cost and effort.https://www.biggerpockets.com/blog/rental-property-cash-flow... 

This is eerily similar to the unsecured loans I've made and haven't seen a payment on in over two years.

To be more specific about what i'm looking to do: My 1-2 year goal is to employ the BRRRR strategy with SFHs and Condos by buying distressed / highly undervalued properties that need work (preferably all-cash) in low crime areas with strong rental demand, renovate them within budget (again preferably all-cash) and get them rent ready before refinancing them at the highest ARV possible.

Live in one unit - It's a great strategy when using a bank for financing as the down payment and interest rates are more favorable to owner occupants.  

If you are on cash accounting, yes you could do that.On the other hand, you are ignoring carry-forward losses.