"What should I do to improve my position with my 40k in equity that has income with out a time constrant?"...............

Now that I'm finished with grad school, I'm ready to take action and jump into getting involved with real estate. 

Actually, the equity isn't really earning anything if he has positive cash flow since he isn't saving the interest payments because his tenants are paying them. 

I was planning on self managing since its just a single family home and I'm not going to have any positive cash flow until at least 2 years so I don't want to give up another percentage to a management company.

I'm not an attorney, but I'm basically positive that kind of thing is considered illegal if he's just trying to jack up the HOA fees to get others to sell at a discount.

Great to hear you are ready to start taking action with your wife.

Not much action here for >740 FICOs. 

One example and there are many, would be a private money lender with a first lien position. 

To get technical, you will be going up against the Economic Substance Doctrine which states that a transaction has economic substance if: (1) the transaction changes in a meaningful way (apart from Federal income tax effects) the taxpayer’s economic position; and (2) the taxpayer has a substantial purpose (apart from Federal income tax effects) for entering into such transaction.By transferring your primary residence into a LLC, you would not be changing your economic position.

If you don't have the reserve funds going into a investment property you are not in a position to invest.