IRS does not allow private annuity trusts anymore for capital gain deferral. 

I want to get my license to gain additional education as well as the other benefits for personal investing in residential properties.

Active investors will not invest time in teaching / mentoring / coaching you for free...you must bring something to the table because active investors have little time available and they simply can't give it away without gaining something in return.

I casually mentioned during a telephone call that it "might be" capital gains income, but I needed additional time for more investigation.  

If you turn it into a rental and then sell more than three years later, that gain will be taxed.

It sounds like this strategy means I show regular taxable income, then put it into tax deferred, which is really net 0 gain.

He refinanced a couple years ago which cashed him out of whatever original gain of equity he'd had since 2008.

I believe this is my best opportunity to gain entry into the real estate business.

That way you can gain the experience from what if takes to run a small business and build from there. 

I have gained a bunch of great information on here and am still learning more everyday.