You are describing what is a very common clause in a property management agreement. 

Taxpayers cannot claim a subtraction for any income that is treated as ordinary income on their federal income tax return, including any recapture of depreciation.Capital gains must satisfy all of the following criteria to qualify for the subtraction:1) the gain must be included in the qualified taxpayer's federal taxable income for the year of the subtraction;2) the gain must be earned on either qualifying real property or qualifying tangible personal property, meeting the requirements described below;3) the qualified taxpayer must have acquired the property on or after May 9, 1994;4) the taxpayer must have owned the property for at least five uninterrupted years prior to the sale.Qualifying real propertyCapital gains from real property qualify for the subtraction only if both of the following conditions are met:→ the real property is located in Colorado; and→ the qualified taxpayer acquired the real property on or after May 9, 1994, but before June 4, 2009.Real property located outside of Colorado and real property acquired on or after June 4, 2009 do not qualify for the subtraction

He is mainly describing buying a home, living in it and when you sell it 20 years later you think you made money from the appreciation but you don't figure in all the expenses throughout the years.  

I run my family’s 8 retail stores and we run that business just as you described your Rental business.

@Travis Fairbairn 25% down is pretty typical for what you are describing.

@Dakota CoburnWhat you are describing is syndication as a general partner.

Personally I don't know the sub markets in the BA well enough to say if Oakland is a good spot but I like the concept you're describing

We do some deals similarly to what you are describing.

He described the building as B- quality with very few A quality properties in town.

What you are talking about is buying a BRRRR deal from what you described.