Depending on your income you might qualify for the "Small Landlord Exception" to take the loss. 

The income aspect is a little different though, because you will not be able to verify, or they may not show income on their application if they don't have any. 

As our rental income is building up in the bank account now, we are wondering how to finance the next one.

Verifying last 2 years of rental history and income extremely important to find the “best of the worst”.

Then it is time to invest in real estate.There are other legs to the three legged income stool… appreciation, and mortgage pay down.  

While the new property may bring in additional monthly income, the increase in your monthly net may not justify the amount of new debt that you would be taking on.

I am self employed and try to minimize my W2 income. 

My debt to income ratio isn’t great considering my current mortgage

Has been working well from 2008 onwards till date, but you should have capital and should have alternate income to support the property expenses.

Buying existing LTR or STR with proven income that may just need an update or a value add (add more units, add more bathrooms, beds rooms, etc.) and your next one you can try a riskier property that has less proven income.