Long term play would be to either use it as a short term rental or 1031 exchange it after 2+ years.

Yet, when I initiated a withdrawal, I was met with a complex set of terms, penalties, and withholding conditions that were never clearly explained beforehand.

Also, first thing, AirBNB is a platform where you list your Short Term Rental. 

I know of some folks in KC and Memphis doing new builds like this, but they are doing it within a much larger and long-term project that includes upwards of 300-500 units built over the course of 5-10 years.Assuming you're looking in Columbia, do you have a "B+/C" neighborhood in mind?

ThanksThere are no plan to sell any real estate in the near term. 

I don't know how that business could survive long-term with such low rates.If those numbers are accurate and you can net $38,000 a year, then it's worth holding onto.

The homeowner collects a NET/NET 5% yield with 1% increases each year in long-term lease by a BBB+ credit rated tenant (similar to Morgan Stanley credit).

Real estate wealth is built through long term price appreciation, property becomes (usually) more valuable over time, especially if purchased in areas that have either gone through development or redevelopment.  

Negotiating seller concessions, networking with local investors, and learning property management skills have been key to finding deals with strong long-term potential.Good luck!

If you are able to sell I'd say sell, if it's not looking like that's going to happen then try to get it on a long term loan with renters so you can save on your monthly payment, then get the equity back out and move onto something else!