Here it goes...Will contributing to a traditional 401k to reduce my taxable income now reduce my W2 income essentially limiting my buying power for acquiring more RE?

Let's say you decide that plan A is to buy and hold with mid-grade finishes.

I install electric water heaters in my units because they are cheap and easy to replace, Ace Hardware sells 40 gallon units for $299, vs a power vent Gas one is $749, and life span is about the same.

More power to you.  

Now 3yrs later, the son of the deceased sister who had power of attorney for his mother (she left no will just a supposed request on her death bed that the house be sold) wants to extract the equity out of the house.

Working with people like this has shown me the power of real estate.

I still have baseboard heating so even though the ski season would get good utilization, the economics don't work with the inefficient heating setup.French Broad (local power co) is running a program to sell ductless split unit heat pumps at cost and will finance them.  

You want to check out this podcast: Bill Powers uses the lease option strategy for his investing.https://www.biggerpockets.com/renewsblog/2016/07/28/bp-podcast-185-rent-to-own-increase-cash-flow-maximize-equity-bill-powers/

Knowledge is power and my power is free.

You can always ask, and more power to you if that works out - just not likely something most would consider.