They will hit you with a unrelated business income tax (ubit).Furthermore, you will never pay capital gains said proceeds, since all your money will be taxes as ordinary income when you take it out.

There is no distinction between some of the $ that is pretax and some that is after tax.2: If you leave your job or get fired, you have 60 days to pay it all back otherwise IRS views it as a taxable event as slaps you with ordinary income tax on all of it plus a 10% penalty for early withdrawal.

Misrepresentation/omission.Actions constituting misrepresentation or omission, or both, include: Using "bait and switch" tactics by advertising or offering real property for sale or rent with the intent not to sell or rent at the price or terms advertised, unless the advertisement or offer clearly states that the property advertised is limited in specific quantity or for a specified time period and the licensee did in fact have at least that quantity for sale or rent at that price or terms at the time of advertising;Failure by a licensee representing a seller or landlord as a standard agent to disclose in a timely manner to a prospective purchaser or tenant all material adverse facts pertaining to the physical condition of the property which are actually known by the licensee;Failing as a licensee to tender promptly to the buyer and seller every written offer, every written counteroffer, and every written rejection to purchase, option or lease obtained on the property involved;Failure by a licensee acting as an agent to disclose in a timely manner to the licensee's client all material facts related to the property or concerning the transaction when the failure to so disclose would constitute failure by the licensee to exercise ordinary care as defined in the brokerage agreement; I guess it  varies from region to region, but I figured things like this would be standard.

If I saw anything out of the ordinary, I would go to more frequent inspections

The good news is we have $6k in the bank, and quite a large credit line available.The home were renting is of little value, there are multiple problems she's refused to fix, like electrical issues, holes in the rotting floor, broken deck-patio.  

But that entails earning ordinary income, which adds up to your W-2 income on your tax return.

Although income from the sale of inventory or property held for sale in the ordinary course of business is taxable, gains from the sale, exchange or other disposition of property otherwise is not.

If I later sell the property, is it cap gains or ordinary income?  

Businesses that don't make a profit get flagged for hobby losses....however all of these properties will see income because they are not financed.If I report all on Schedule C, the income will be classified as "ordinary" and I'll have to pay the SE tax...not to mention it will get flagged because I'm not a "real estate professional".  

Tax deferred money and earnings on it are taxed as ordinary income when the money comes out.