If i don't pay anything for the audit defense, then I do not have a deduction.Furthermore, if the CPA made an error that resulted in additional tax and interest/penalties, then I would pay the extra tax but expect the CPA to cover the interest/penalties.

Additionally, I'm assuming "paid deposit" is earnest money, or no?

The property will be obvious more attractive without additional fee charged to tenants.

We are planning on refinancing and paying off the loan and pulling out additional equity once completed. 

Here are some additional benefits it has over SD IRA:Great tax-shelter: contribution limits nearly 10 times higher than an IRA (up to $60K/yr)Exempt from UBIT on leveraged real estateGreater protection from creditors Ability to invest tax-free using Roth (post-tax) component Lower cost since there are no custodian, asset-based or transaction feesand more!!

Your tenants are staying with family so they are not accumulating additional hotel expense. 

Additionally, In the last few days, I have several other motivated seller leads coming in for great fixer up properties but I don’t want to dig to big of a hole before I get something earning income.

@Sunitha Alli in addition to the other's good comments.

Additionally, the properties are all over (two-flat in a suburb of Chicago, a duplex in Austin, TX, a single family home in Ruston, LA and another single family outside of New Orleans.  

Additional books that focus on what you choose could be a good next step.