A little bit about my situation: I am buying a house to perform a live-in-flip. 

My current  property manager is not performing as I'd like. 

The frustration of mailers not being answered, sellers not accepting offers, buyers not performing their end and the list goes on.

I have a few rentals in that area and there are certain pockets that are performing well.

Those are already performing with all the metrics needed. 

But lets just say that as a median performer, you want a duplex/triplex operating, and you need it to pay for itself, and make you a couple thousand dollars a month over a yearly average.

The challenge that you are running into is that you are confusing cap rate for a measurement of performance, which it is not.

You should really vet the CPA that you decide to go with.Taxation on notes depends on several factors such as is the note performing or non-performing?

not sure what is scarier, that you do not see the risk involved in note investing or the actual amount of risk there is in non performing note investing. 

Generally these underperform at best and are nightmares at worst, so at this point most either sell for a loss and get out of real estate, or graduate to higher priced SFH in better areas that actually perform as planned.