@Kam MillIMO with one house you may want to add any positive cash flow into the 1/ reserve account 2/ extra Principal until you are ready to refinance or you need the money for this house

It already includes property management fees.So if I put down 25% and assuming closing cost is 5%, I would have invested 120K.According to RedFin, I'll roughly pay $1400 a month for principal and interest.So 1400 X 12 = 16800.So my annual profit is 54,000 - 16800 = 37200And my rate of return is 37,200 / 120,000 = 31%Does this sound about right?

The 90/10 principal applies in landlording.  90% of the problems come from 10% of the people or properties. 

My goal is to buy a home by Nov 2020 (before 25th birthday) and make it my principal residence.

You can also invest in other more active strategies where you can benefit from monthly payments, appreciation, principal paydown, option considerations, etc.  

Do you have any experience with renting through a principal residence and how to ensure you are deducting less than 50% of expenses to ensure the home is still considered a principal residence and not taxed as a capital gain when sold?

Debt service is the interest only, principal paydown is taxable.

You can employ the principals of leverage if you like and boost returns. 

It’s the same as having any other loan....rent is income, interest payments are tax deductible, principal payments are not.  

However, if you consider appreciation and principal payoff (approx. $600 mo. currently) we would still be doing okay.