If it's an ordinary loss (and I agree with @Ashish Acharya - it looks like it qualifies) - then it is reported as ordinary loss on Forms K1 that are sent to partners. 

Sold home(2) that I inherited, I'm in Texas, i don't qualify for capital gains tax as I already have a primary home(1).

With the investor loan, you will be limited to 2% in most cases.For a cleaner qualifying situation, don't try to close them at the same time. 

When you interview at your friends bank ask these questions: When do you start using rental income to help me qualify?

It's a good niche because if it needs rehab, it likely won't qualify for a loan. 

Your skills and character traits are not ordinary.

He wanted the 0% financing he saw on the window, and only then learned that he didn't qualify, having never borrowed money, and so he grumpily wrote a $12,000 check for the cheapest new car he could find..... despite us begging him to buy something a bit larger and safer.  

Eg... if you qualify for the secondary market grab 10 props  ( up to 40 units as you are able to buy up to a 4 unit and still qualify for secondary market funding ) where you can lock in up to 30 year money.

if I were him and I was doing all the work I would want 50% even if you had twice as much money in the deal as me because he is providing all the expertise.It is easier to find money than it is to recognize a good deal and have the skills to make it all work.

call your all your credit card companies and see if you qualify for a 24 or 18 month same as cash balance roll over, then pay the balance transfer fee and roll it over to buy time to seek traditional financing.