Friend of mine has a townhouse, bought in 2008 for 170k, owes 146k (houses around there are going for about 130-135ish), Payment including taxes and everything is $1046.

He has gone the route of selling his property through owner financing For tax purposes) and at this moment is refusing to accept a cash offer. 

Ok, if I understand everything I need to do correctly (from the above answers and other info), this is my plan so far:To do now:Set up a Solo 401k (with Mark, Brian, Dmitriy, or someone).Set up 6 bank accounts inside the 401k: "pre-tax", "Roth", and "after-tax" for me, and those same three for my wife also.Rollover my Traditional IRA funds to my "pre-tax" 401k account.Rollover my wife's old 401k funds to her "pre-tax" 401k account.In-plan rollover of both of our "pre-tax" 401K funds to the "Roth" 401K accounts (tax will be owed).2016 Employee contributions: Transfer $18k from my business account to my "Roth" 401K and $18k to my wife's "Roth" 401K.Also transfer a small amount from my business account to my wife's checking account as the remainder of her pay (maybe $2k).

Thanks to all who've responded - these are all good thoughts and great advice.The only timeline for completion is that the house is just sitting there and I'm paying taxes on it and will be paying to keep it heated this winter. 

Taxes 3800 a year.

This can be something fairly minimal, so long is it produces legitimate income that you report on your taxes, such as with a schedule C.  

Does anyone know or know where to look for what we should be collecting for sales taxes

Suppose one purchased a 4 plex for $400k and took the standard depreciation for 27.5 years deducting $300k for tax purposes.

I rent it for $1750 and mortgage/insurance/taxes/association are $1100.

A 2 BR or 3 BR townhouse condo in the same complex easily costs 3x - 5x as much to rehab if it has been neglected since the 1960s, while only drawing 1.5 - 1.8 the rent.The purchase price for the latest unit is $18,000, and closing costs including reimbursement of pre-paid property taxes will bring the total to $18,700.