they screen the tenant for income eligibility and require a physical inspection of the property before tenant moves in and on a yearly basis for renewals. 

We mass analyze the entire market here simultaneously and there are dozens of properties that would produce that type of income for less than $700K. 

When I calculate an offer on a property, I typically look at the potential rental income and subtract from that all operating expenses such as taxes, insurance, management and maintenance.

However, bank is not accepting virtual address as physical address and the banker is telling me that I cannot open an account in a different state than  where LLC is registered. 

Flips are exciting, you learn a lot, more risk, more upside, more headaches, more short term taxable income. 

We are also getting a forgiving loan of 30k for the duration of 10 years from the county for 1 unit if we rent out the 1-bed basement unit to a household with income less than 100k and at the rate defined by the city )(~1183+ utilities) for a 1 bed unit.

I have no savings, and our debt to income isn't great right now, but we are making progress.

Once you have that rolling and you understand the game you can then invest your W2 income into additional properties. 

They want to buy the home from me but are running into issues with debt to income ratio, so not eligible for FHA. 

Losses are going to offset future income.