As mentioned above, that doesn't leave you with much room for error in case any significant capital improvements are necessary. 

Or is it beneficial to pass it on in an estate, for the step up in basis, and then we sell without capital gains?

Presumably at some point, once you've built up enough equity through BRRR and made enough money through monthly cash flow, you would be able to get your initial capital out and yet keep "substantially all" of your assets in "qualified opportunity zone property" (90% for QOF and 70% for QOZB). 

New mortgage brokers often will not have the experience and not have built up a portfolio of lenders they know will close the deal and not re-trade mid deal.My capital markets brokers close hundreds of millions a year in loans.

Should I just save until I build up enough capital to get started?

Passive losses can only offset passive income (Unless your AGI is under 150k, phase out begins at 100k- or unless one of you qualify as a RE Professional- which if you both have full time jobs isn't very likely)So your potential passive losses from the Rental will carry forward until there is a time with passive income, and then it will reduce that.Also, much of those renovations to get that rental ready to rent will need to be capitalized.

You also will need to use capital to significantly improve the properties. 

Similarly, people in large coastal markets may have more access to capital and fundraising opportunities (at least that's what I have found).

We return 50% of the capital to investors.

Or seek capital from friends and family to avoid the PMI and get a conventional loan for 20% down?