I've got a friend who owns a rental in the Raleigh, NC area that a company just pays him a check every month for the right to rent it out.

Here are some additional activities that count, toward real estate professional and material participation hours.Research market for real estate transaction opportunities; current office market rates; terms of financingMaking offer contracts for properties that you end up buyingNegotiation for acquisition of rental properties that you end up purchasing; including directing due diligence and managing financial projections/business plansObtaining financing for properties that you purchaseProperty inspectionsAdvertisingMeeting with Prospective Tenants/showing properties to prospective tenantsNegotiate, obtain, & review proposals and contracts with vendors (insurance, utilities, etc) for property servicesReview and Negotiate The Terms of Sale AgreementsStaging and Decorating3rd party contractor, vendor, or service provider supervision

I will share my experience once it's up and running It's been a few months, how is ReiReply Dialer working for you?

Many policies have zero problem with 3-6 month vacancies.

I am military, and from what I’ve read there is an exclusion of capital gains taxes out to 15 yrs vs the normal 5 for military members.However, I only lived at the property for 18 months, not the 2 years required. 

You can start deducting depreciation and other expenses from the date the property is "placed in service", which is not the same thing as the date someone first books it. 

Does it take months to go through the town municipality?

You should have at least 20% for the down payment and 6 months of reserves. 

So I suspect this is actually closer to over $1000 a month negative.  

If you buy a property and the HOA fee is $500 a month, that's great but it might not be what you're paying each month.