If your goal is to generate passive returns, real estate (done properly) may not be the right vehicle. 

Is there any other way that we would be able to use the funds from our retirement accounts to purchase a vehicle for our business without getting stuck paying taxes and a penalty?

An LLC is a good vehicle for many businesses, it might be applicable to RE, I know it's been done quite a bit.Consult with a Lawyer to make sure everyone is protected and you are covered for these cases. 

There is a tenant in the property who she says is being difficult.Not 100% clear on this issue and will follow up for more clarity but there is a vehicle which is underwater about 4k that was somehow tied to the estate by the tenant.

.- 30M/27F (Me and my wife)- No kids- No debt (besides vehicles and house)- I make 90k, wife makes 70k- Combined income: 160k- House value: 250k (when purchased, now worth 270k)- Mortgage: 150k- Equity: 105kSo with that, we are looking at selling our home and buying a 350k house and plan on having 2 kids within the next 5 years.My question is this.

What vehicle did you choose and what strategy did you execute?

Jobs, Amazon is expanding, Volkswagen has their first fully electric vehicle plant right near one of my duplexes.

Owning real estate is a mathematical equation, it is vehicle to get you to your goals.

He is constantly parking his vehicle (and others) in the street and works on them all day which I'm pretty sure is illegal while blaring terrible music...

This man(Bryan Petrinec)  ended my vehicle in his 3500 silver dodge while I was parked.