.- If they make a very high salary, but have no deductions for any kind of benefits, that's also a red flag that would cause me to dig deeper into the app and request additional documentation.- Taxes.

You’re in charge of the timing of tax deductible spending.Once they are paid off you should be able to live off the 10 properties and never have to touch your “retirement accounts” where the plan is to hope you die before you run out of money.If you ever retire from your w-2 job, or get fired.

If you make below $150k you may be able to deduct some rental losses. 

Just recalibrate the expectation - the benefit comes from a combination of accelerated MACRS on the original structure + 100% bonus on new additions, not all from a single year-one deduction. 

I hadn't modeled depreciation, mortgage interest deductions, or the 469(i) passive loss allowance, and you're right that it materially changes the picture.

My question is: Is the mortgage interest on equity from 1st home will be tax deductible so that I can use that mortgage interest to offset rental income on 1st home?

This timing is ideal, as achieving Real Estate Professional (REP) status in 2026 will allow you to fully utilize the significant bonus depreciation deductions from the study to offset active income without passive activity loss limitations.

If it's between $100k-$150k, you get a partial deduction (phased out).

I have W2 job and the real estate property (cash flow negative), so I want to do deduct things like (depreciation, mortgage interest + home insurance, hoa, sewer + garbage, property management fee, laundry machines).

That’s a very powerful tax benefit, and once you convert it to a rental and time passes, you start chipping away at that clean exclusion window.If you rent it out instead, you’ll pick up rental income, but you’ll also get depreciation deductions, which can reduce or even eliminate the taxable income on paper.