That's incentive enough to report erroneous expenses to reduce my MAGI as I may reap the benefits. 

This is a very interesting discussion for me as a Realtor and an investor^^As a Realtor in the city of SF, yes arguably the "craziest" market in the US at the moment, I have to admit that having a proven lender in your team and reducing-if not removing- contingencies are the the most important things I need to work on when working with buyers.

When you first started investing did you have earned income?

Those who invest in physical property to earn money as rent must also make themselves available to tenants and manage potential problems within the building, such as conflicts between tenants or legal disputes over damage to the property.

They could take that all away at any time (or at least reduce it significantly).

After loan of the 52k, which we included mortgage, taxes, insurance, plus the water it looks like about a 20% cash flow about 150.00We did find a house hopefully ,still available, that if I can get for 30k when done will be able to get around appox. 28% and if I can get taxes reduced would be hopefully upwards of 35%.

I would talk to the Board of the HOA and find out if they'll reduce or forgive the fines associated with these violations in exchange for a performance bond that you'll get it all fixed.Most HOAs just want the stuff fixed.  

The buyer slides the pile of cash across the table along with all the opportunities that go along with controlling such a large sum of money.The deal closes, but just before it does, the sticks his greedy, sweaty hands into the pile of cash and extracts a measly 2.5% of highly taxable earned income.

Of course you will probably have to cut them in on the earnings, but this will give you a hand up especially if you feel like you need to take a mortgage out.

You could look at turnkey out of state and earn a cap rate of 8% which would bring up you CoC to +12%.