An S-corp is a great way to save on taxes, but only at certain income levels as you have to weigh the new administrative costs against the tax benefit you receive. 

I have saved enough for a down payment for a house and have a steady income coming in.

If your family qualifies, you can offset your active income with your real estate losses.

We are already a fortunately high net worth family. however, that is from my spouses W2 income, so at this stage we don’t really have anything tangible to “leave behind” and we want to try to build generational wealth for our child. 

I would require them to show proof of income to verify they can afford the increase, then make them sign a lease.

Jennifer - If you have vetted the prospective tenant thouroughly (i.e. credit check, income qualifications, etc.), you shouldn't have to worry whether or not you sign them up for a 1-year lease or a month-to-month. 

@Grant Gibson there's a great book called Passive Income In Commercial Real Estate by James Kandasamy. 

You mentioned a prepayment penalty, more information on DSCR loans available below.DSCR loans won't use your income to underwrite the loan.

How much monthly rental income are you shooting for? 

The CPA actually does not do our income tax.