Private money and Hard money are good options but probably not the best options for a brand new investor.

@Justin E. - Congrats!  

Well you can already deduct any expense related to your rentals on your schedule E.

I'm brand new, so realize this is probably all idea and n experience.54k in back taxes is huge!!!

The HOI calculation is a bit high but that is better than under estimating.I would also buy the homes all this year becasue if you buy some this year and some next year, depending on the time of year you'll need to show your schedule E income and that will be a totally different calculation. 

New roof, siding, paint, brand new carpets, kitchen appliances, bathroom finishes, and more.

One of my first tenants, even though it was clearly in the lease that repairs or changes are not allowed without written permission from me, put down those old tacky peel and stick kitchen tiles in a bright blue over my brand new neutral flooring, changed out the dining room light fixture, and painted the house in horrible dark colors.  

There are some parts of the Midwest where you can easily get 2% like in the market where I invest, but appreciation hasn't been as high as some of the cities on E and W coast.

Btw, when I asked him about fixing issues in the work that he did (like a warranty); he replied that I can call him anytime to fix it for free but there will be no issues since he is e-decking and tearing off the old roof and putting a new roof.

When I say new, I am brand new to this whole idea of real estate.