Traditional IRA withdrawals are taxed as ordinary income, with a 10% penalty if under 59½, potentially pushing you into a higher tax bracket.

Is $107k your true net, or do you have any other expenses (mortgage, taxes, lodging taxes and fees, insurance, utilities, landscaping, WiFi, etc.)?

Lower taxes.

So if you buy a 5 bedroom house and rent the spare 4 bedrooms = you can still sell tax-free under the 121 (you just pay back depreciation) If you buy a duplex and rent 1/2 and live in 1/2.

There are monthly mortgage, taxes, HOA dues and insurance expenses each month, however this still generates great cash flow every month.

The transition isn't just about property size; it's about shifting your entire approach.I've observed that successful transitions typically happen when investors have:- Stabilized 5-7 single-family rentals with systems in place- Built relationships with at least 2-3 reliable lenders- Established a maintenance crew that can handle larger projects- Accumulated at least 6 months of operating expenses as reservesI asked a client of mine who owns a 420-unit multi-family in Nevada how he started his RE investment journey, and he told me that he started with a duplex in Buena Park, CA, 40 years ago and used the 1031 exchange to grow his portfolio to 420 units, never paid taxes on sale of any of his properties.The most seamless path I've seen starts with small multi-family (5-10 units) rather than jumping straight to 50+ units.

One good thing about building a 2-4 unit as a primary is you less money down and you can use the other units as income to help build a more expensive home.FHA allows for a higher loan amount as you get into the 2, 3 and 4 unit homes and its still only 3.5% down.

But, if the end goal is to have truly passive income you have to eventually build a hands-off turn-key operation or outsource the work. 

If it was 20 years ago and they had the same name, its gonna be an uphill battle to go back now after someone has been paying taxes on a property and probably upgraded it during that time.

These two loan types are among the few exceptions that permit closing directly in the name of an LLC.Most of my clients initially take title in their own name, then later transfer the property into an LLC or land trust for asset protection or tax benefits.