It may make more sense to be a lender to other flippers or invest in rental properties - both of which create passive (non taxed) earning in an IRA.

My purchase price on the property was $375k which means I have $325k of capital gains.

Think of it this way:  to make up for the $400 negative cashflow per month, you need to gain twice that per month in profit when you sell just to get back to neutral. 

There is no guarantee the price of the home will sit still so you could gain or lose there too.Just some thoughts.

We started with these goals:Business partner wants to retire in ~6 years.I want to retire in ~20 years.We want to have $120k in cash flow by year 6 and $600k in cash flow by year 20.After buying and improving each business or property we want to outsource management.With these goals in mind we came up with a plan to invest $220k per year for the next 5 years ($1.1m total excluding capex), purchasing one passive income business (apartment building, storage units, ???)

not reallyAnother level of complexion is losses that are passive may not be utilized to offset your other income while some taxpayers can. sometimes it's best to keep things simple. 

Also, great idea to source loopnet for that info.I would definitely hire property management for a property of this size and would vet the PM co. like crazy and get lots of recommendations.Although I was really just interested in analyzing this deal to gain some experience it was definitely intriguing.

Do you want passive income from that $40K?

Or, you might end up with a mix of active and passive deals. 

On top of this, you are doing your daughter a great service by allowing her to gain real world learning experience managing a rental property - she will learn more valuable lessons from that than the 4 years in college courses!