You need to start by washing everything (walls, ceilings, cabinets, doors, lights, etc with a generous portion of tsp (trisodium phosphate - available at your hardware store).

This is essentially a refinance where I can return a portion of the investors initial capital back without having to pay a prepayment penalty.

@Tyler Barker I think its as simple as putting any money into real estate. i started calling myself an investor after i finished my first duplex and rented it out but during the process i kept alluding to saying it was like a hobby. my career as a whole is in real estate but the actual investment portion of it is only a percentage of my income but i do consider myself an investor because i put time and money into real estate whether its a buy and hold, flip, or partnership investment. when someone tells me theyre a real estate investor though, my mind automatically goes to landlord or flipper.

You will still have a taxable portion from depreciation taken over the last few years . 

They have a modification in place...the only thing due right now are the payments on the $240K portion -- the latter second is due in 15 yrs as a balloon...... they lender deferred that portion -- PITI on the 240K is $1650. so yes, right now total they owe 409 -- house, fixed up is worth 440 -- they are 25k in arrears  -- no go right? 

Same result either way: interest portion is deductible.

A large portion of our management portfolio is in low-income neighborhoods where you're not going to see any appreciation, but the potential for cash flow is phenomenal.

This will at least give you a rough idea what you're approved for but keep in mind that if some of the units are occupied they will be able to count a portion of that rent income to help you qualify for a larger loan, but also be aware that inherited tenants can also come with a bigger headache and cost you more money than a vacant unit so do your due diligence on that tenant as well.

After 20% down, rent covers interest payment, tax, HOA, plus some portion of principal payment...I still have to pay about $300/month in principal payment....

I sell some portion of the property to the LP instead?