This rule applies only to the part of the residence not used for a business.Highearner: If you are a high earner (Singles with modified AGIs over $200,000 and couples over $250,000), then take these steps to limit the sting of the 3.8% surtax on net investment income: taxable interest, dividends, gains, rents, annuities, royalties, passive income and such.If selling property, use an installment sale to spread out a large gain.

As part of our Benefits package, our employers pay into an annuity fund for us.

Everyones goals are different, mine are to basically have an annuity, my properties are well managed and taken care of, no reason to not pay them off, use them for Lines of credit to do bigger deals. 

If long term hold is your goal and having that annuity and diversification  is important to you, my advice would be to hold onto the unit for the time being.

It's basically an annuity that grows with the stock market that allows you to take metered payments until 59.5 yrs old to pay off real estate, no real restrictions (can even be your primary residence or remodel).

I'm biased, but I think you sound like you have a whole journey ahead of you, and turn-key to me is more attractive for older investors with large 401k's or annuity funds that are looking to move their money into cash producing assets, without any of the work. 

I'm thinking about cashing out my annuity to purchase cash flow real estate properties.

Now IRA/Annuity/Savings are all good.

Following are the similarities and differences between the solo 401k and the self-directed IRA.The Self-Directed IRA and Solo 401k Similarities Both were created by congress for individuals to save for retirement;Both may be invested in alternative investments such as real estate, precious metals tax liens, promissory notes, private company shares, and stocks and mutual funds, to name a few;Both allow for Roth contributions;Both are subject to prohibited transaction rules;Both are subject to federal taxes at time of distribution;Both allow for checkbook control for placing alternative investments;Both may be invested in annuities;Both are protected from creditors;Both allow for nondeductible contributions; andBoth are prohibited from investing in assets listed under I.R.C. 408(m).The Self-Directed IRA and Solo 401k DifferencesIn order to open a solo 401k, self-employment, whether on a part-time or full-time basis, is required;To open a self-directed IRA, self-employment income is not required;In order to gain IRA checkbook control over the self-directed IRA funds, a limited liability company (IRA LLC) must be utilized;The solo 401k allows for checkbook control from the onset;The solo 401k allows for personal loan known as a solo 401k loan;It is prohibited to borrow from your IRA;The Solo 401k may be invested in life insurance;The self-directed IRA may not be invested in life insurance;The solo 401k allow for high contribution amounts (for 2016, the solo 401k contribution limit is $53,000, whereas the self-directed IRA contribution limit is $5,500);The solo 401k business owner can serve as trustee of the solo 401k;The self-directed IRA participant/owner may not serve as trustee or custodian of her IRA; instead, a trust company or bank institution is required;When distributions commence from the solo 401k a mandatory 20% of federal taxes must be withheld from each distribution and submitted electronically to the IRS by the 15th of the month following the date of each distribution;Rollovers and/or transfers from IRAs or qualified plans (e.g., former employer 401k) to a solo 401k are not reported on Form 5498, but rather on Form 5500-EZ, but only if the air market value of the solo 401k exceeds $250K as of the end of the plan year (generally 12/31);When funds are rolled over or transferred from an IRA or 401k to a self-directed IRA, the amount deposited into the self-directed IRA is reported on Form 5498 by the receiving self-directed IRA custodian by May of the year following the rollover/transfer.Rollovers (provided the 60 day rollover window is satisfied) from an IRA to a Solo 401k or self-directed IRA are reported on lines 15a and 15b of Form 1040;Pre-tax IRA contributions on reported on line 32 of Form 1040;Pre-tax solo 401k contributions are reported on line 28 of Form 1040;Roth solo 401k funds are subject to RMDs;A Roth 401k may be transferred to a Roth IRA (Note that from a planning perspective, it may be advantageous to transfer Roth Solo 401k funds to a Roth IRA before turning age 70 ½ in order to escape the Roth RMD requirement applicable to Roth 401k contributions including Roth Solo 401k contributions and earnings.)

Assets = $100 (real estate, stocks, bonds, retirement plans, bank accounts, cars, annuities, etc)Liabilities = $80 (mortgages, car loans, credit cards, etc)Net Worth = $20IMO, it's an important financial practice to maintain a monthly personal balance sheet.