So, it will be taxed as ordinary income. 

It's essential to conduct thorough market research to identify areas with potential for rental income and property appreciation.Financial Considerations: While purchasing a property in Oakland may allow you to build equity, you'll need to evaluate whether the rental income from house hacking covers your mortgage, taxes, insurance, and other expenses.

Aim to purchase and renovate a property for resale, with the ultimate goal of acquiring additional income-generating rentals.

Passive  income is fairly consistent - especially to the bank.  

My unit grosses $115K in rent (clean of any other fees or cleaning fees).

Make sure they are experts in your market segment too. if you want to do low income housing, then a great manager who focuses on B class properties isn't going to work.

It is a rent by the room home that grosses $4300 monthly.

Essentially, from the buyers prospective, this is a “penalty” paid for either having poor credit (bankruptcy, 90 day lates, overburdened with debt) or lacking income.  

The advantage is that, by living in the smaller unit and renting out the larger one, you generate a lot of rental income!

Typical rates are 8-12% of income either monthly or yearly depending on manager.