We are not focused on the passive income at this time as both working W2.Questions:1.

At that time, my friend encouraged me to get into real estate with the idea of creating passive income and wealth in future (via appreciation).

A growing income stream is worth more--so I'd like to see growth so that there is a path to profit. 

Your income isn't high enough for it to make sense as a rental and the closer you get to your residence limit the greater pressure you will have to sell it before losing your exclusion in whole or part. 500k right now can make $15k per year income with zero maintenance or tenant risks. 

I can't just put the LLC's income directly into my joint personal tax return, right?

I think i want to be passive. 

Rent: Stabilizing the Property for Cash FlowOnce the property is rehabbed, the next step is to find tenants and begin generating rental income.

I am 80 years old and rely on investments for retirement income.

However, as W2 earners, these losses are considered passive and can only offset passive income unless you or your spouse qualify as a Real Estate Professional (REPS) by meeting the 750-hour and material participation requirements or STR is used.

This is easy for some people that have lots of friends investing in passive real estate opportunities.