If they are not, you can roll over your 401k into a Self Directed IRA (SD IRA) and invest in real estate that way. 

A self employed person can start a Solo401k and roll over existing IRAs  and old 401ks into the new Solo 401k.

It would simply sit in your passive bucket and rollover to future years, negating the benefit.

This would come from any past employer 401k plans you might have that you can rollover to your self-directed Solo401k and utilize for investments. 

If your plan has both tax-deferred and Roth 401(k) components and is written to allow for in-service Roth rollovers (most do), you could roll the money you've stashed in your traditional IRA into your tax-deferred 401(k) and then do an in-service rollover, once the money is in the 401(k).

The only unreasonable thing you did here was roll over for this tenant.

Many will allow for a direct rollover where the funds are rolled directly to the new plan.

Also does not report to credit or affect debt to income.Risky option - do a IRA or 401k rollover to your checking account.

Unfortunately, your accountant is right about this one.In a 1031 exchange, the goal is to roll over all the proceeds into the new property to defer the capital gains tax.

Find a lender willing to be in 2nd position or find family or friends willing to invest in your project---if they have IRAs, they can roll over into a self-directed and invest in your project.