While we do not see income from these properties and are not managing them we do have a significant amount of depreciation and losses that have been assigned to us and carried over from the past couple years.I am invested in some growth/equity focused projects already and am specifically looking in reliable income focused strategies that are tax efficient provided the losses I have from my family.

My CPA advised me to split the generic costs such as property tax and water bills equally between both units, which seems reasonable.

This loan type looks at the rent currently generated by the property OR the anticipated market rents (determined by the appraiser) and compares it to the monthly principal, interest, taxes, insurance and HOA (if applicable).

there are many tax complications?

The Bank send a 1099 for the charge off for this Tax year. 

I think funds offer more flexibility, but why not take advantage of the tax benefits of a REIT structure? 

Questions I'd have if I were in your shoes would be based around how the CAM expenses, management, taxes etc are going to work. 

It's definitely hard to say without knowing more about this situation but when I have had renters who've dealt with identity theft in the past, they had filed a claim, and there would be something clearly noted on the report that a claim of theft had been filed or their credit would've been frozen.

I would like to set it up so that I can basically hand reports with receipts to my tax guy and be done with it. 

If it's an FHA loan, the lender cannot foreclose as long as the borrower is living there and up on the taxes, insurance, HOA, and property condition.