Now I can see some builders having an issue with comps.. but other than that its crazy to take these funds as income and then pay tax and plow it right back in.. 

The US Government and the States have but one way to deal with this, taxes.

Focus on absentee owners and start with the ones who live the farthest away and only own one property in the area since they have the least use for the property.You can also drive for dollars, looking for anomalies of disrepair and then look them up in the tax records and use a site like Spokeo to do cheap skip tracing.

If you live there 2 years or more before selling you will be exempt from tax on the 1st $250k in profit which is a nice bonus. 

Baselane has the added advantage of synching with your Schedule E you'll use at tax time to file your taxes.

Maintenance and potential repairs will also require a long-term financial plan and setting aside a contingency fund for such expenses.The steady cash flow, appreciation over time, and tax benefits can make a meaningful difference to your wealth in the long term, especially with the principal paydown on the mortgage.However, if managing the property from a distance feels too burdensome, or if you’d prefer the certainty and flexibility that comes with having less debt (especially given the high mortgage rates), selling and using the $100,000 in equity to reduce your loan for your next home may be the smarter move.

Be sure to hold a hefty reserve to handle on-going maintenance, capex, taxes, and insurance.

There are two reasons this is a bad idea.Investing with an SDIRA (assuming it is not a Roth) will often result in paying significantly more taxes. 

If you never sell, (you will it to your offspring) you never pay tax and they don't pay tax.

I 100% endorse adding in the escrows for taxes and insurance to set the buyer/borrower up for success.