So… al of his earnings, ie payment, is reported as .. earnings.. so he pays tax on all of it.  

If you have a $6000 per month interest only payment and the best case scenario is renting both units for $5000 per month (you only mention renting one unit for $2500, perhaps the other "owner" unit is far nicer and commands more rent?)

Mark, I have myself, my wife (owner payments and bookkeeping), a second property manager, and an administrative assistant.

I wouldn't tell the attorney that the tenants haven't paid for three months and you want to evict for non-payment of rent.

(Max vacated rents - your monthly mortgage payment) = +/- net cashflow.

.- I have a mixed use property with 2 commercial spaces rented for the last 2.5 years and 1 short term rental/residential space I have airbnb'd/lived in part time for the past 2.5 years- I owe about $110,000 and have about $200,000 in equity- My credit is 580 - 620 right now due to being laid off last year and missing a couple of credit card payments.

Having a reliable PM and contractor to assist you in analyzing deals will help you run more accurate numbers. 

Still all  in of about 100-120k assuming you split the down payments with subway on 2 facilities.

I don't mind having a slightly higher down-payment, as my primary objective would be cash flow, with appreciation as a close 2nd.

I would rather use the funds to setup the arbitrage unit towards a down payment on an owner occupied property or vacation rental.