Assuming you collected security deposit for down but tenant hasn't moved in?

Some people can't sleep if their money is at risk in securities.  

My first step after filing taxes for this year is going to be to refi my 1st mortgage and divorce debt on 2nd mortgage and credit into a single first mortgage.

Once you settle on the property you should take the paperwork to City Hall and file for the paper license. 

Be sure to get the security deposits for all four tenants at closing.

The person leasing does not have to occupy the property but the lease has to  be executed - meaning signed by all parties and the security deposit already deposited into your account.  4.

It sounds like a PITA to have a unique checking account and file taxes separatly per property.

They are interested in being equity partners as opposed to lenders, but would still require their investment be secured by the underlying properties.

Just create and LLC and elect S Corp status with the IRS for tax filing.

Let me start by saying I’m not a cpa so this isn’t tax advice, go consult a cpa.From my understanding if your AGI is above 100k they start phasing out how many losses you can take (capped at 25k if you make under 100k), once you hit 150k then you can’t take any losses.The only way (I’ve seen) around this (assuming you’re married and you file jointly) is to have one of you be a “real estate professional” which means you spend 750 hours a year working actively on real estate and that you don’t spend more time than that on any other job.If you meet that criteria you can take unlimited losses and use that to offset other income, so in theory you could make say 300k and show losses of 350k and pay zero income tax.