You might need to consult with an Attorney or CPA to determine your type of company to keep you personally protected, a pre qualification letter from your choice lender, and your primary Team members.  

No one is forced to live off of a W2 income it is their safe choice.

It boiled down to two choices; cash out, take the penalty and use it, or roll it into my 401k and take a loan against it.As it happened I had about $40k in my 401k already, so rolling my $50k into it gave me $90k to work with, of which I was able to pull $40k out (not 100% vested yet) and use that for RE any way I want.

I just ran into this exact same problem today, but we weren't even given the choice to put more down.  

Home ownership is a lifestyle choice not a investment and is far more expensive than renting.It appears your life style choices are driving your decision making process.

I am currently using a spreadsheet, which is ok for regular payments but it gets problematic with late payments, NSF, extra principle, etc.Has anyone found software that is beneficial to DYI lenders?

Depending on the bank/lender of choice you may be able to get 70-75% of your cash back out of your rental to invest elsewhere and still pay low interest rates in today's market.

Each of these questions will help you decide what is the best choice for you today and in the future.

Also, learning how to search for the right ones on Craigslist can be beneficial as well.

It is your choice to how many tenants you have in in your rental.