A reference for me to keep track and make the year end tax paperwork easier. 

I have seen local CPA's claim they can help offset high W2's with short term rentals here in LA.

@Nicole TuffarelliI am aware of a few groups that can usually utilize funds from an IRA to help purchase new homes at reduced leverage (usually capped at 70% LTV).It might be more beneficial from a tax-standpoint as well to do it that way instead of drawing it all out.

How bad are the capital gains taxes?

Also property taxes were incredibly cheap at $500 / year (expected to go up in about 3 yrs). 

I understand the tax foreclosure and bank foreclosure before the REO but the HOA had me confused.

The tax deduction is limited to 30% of your adjusted gross income.

If you aren't a Real Estate Professional, I am not sure adding more to your portfolio, with the main intention being tax reduction, is the best option.

I have been driving for dollars and mining the county auditor's site for homeowners who are delinquent on their taxes.

This is all before title, tax, conveyance fee's, water hold, etc.