Also check with a CPA, I'm not sure you're allowed to depreciate a property that isn't rented, maybe they have a work around.So you're comparing only projected capital gain on a property (including it's holding costs for utilities, insurance, taxes and repairs) vs the state fund. 

You can receive some rental income and then also gain experience as a landlord. 

I wasn’t considering the extra equity that I gained in my calculations and I was counting my mortgage being paid by the tenant adding to my return over time.

Ifnyounearn more than $150k at your W2 job, your passive losses can not be deducted from your active income.

It has been very educational has made me really interested in passive buy and hold rentals.

The bullet point section is too passive and too soft of an attempt to close 3.

Till I was left with no money and no passive income.

In exchange for paying back the taxes, my partner and I would gain 60% equity of the house and resell it (free and clear).

If the numbers work and you have sound exit strategies for the deals you analyze you will be fine. 100% agree with @Michael Ablan in that you likely wont make much on appreciation but you can easily cashflow and gain equity through debt paydown.Closing on a Triplex in the area here in a few weeks.

My goal is to create some passive income with it and I want to take care of everything (being the Landlord).