After holding, we will use the proceeds which are going back into the self directed IRA to update it and sell it, when retiring.

@Nicholas GrandstaffThe best time to invest in real estate/yourself was 20 years ago.The second best time to invest in real estate/yourself is now.I am happy to hear that you are making the steps forward to invest in yourself/real estate.It is tough to say taking a retirement distribution is a smart/wise move.It depends on what returns you were achieving in the retirement accountsWhat marginal tax rate you are in right nowWhat return you will make on those distributions?

As as small business owner, I feel that this is my best avenue to retirement.

Rather, go find yourself a tax attorney or CPA who has expertise in the use of tax-sheltered retirement funds for alternative asset investing. 

It’s more for parents to retire so I dont bank on cashflow but more on appreciation in the future (like NorCal market).

The rent from these properties are paying for my parents retirement. 

It is a developing community and seniors are retiring/selling there homes on a regular basis (Fredericksburg area as a whole).

Depreciation, like most deferred retirement plans, postpones taxes, it doesn’t eliminate them, unless you never sell the property, or keep “exchanging it” , usually on less favorable terms and with large third party fees.

You mentioned having quite a bit in stock market accounts..if you have funds in retirement accounts you can invest that money in real estate too..there are special rules , you'll want to look into self directed IRA or 401k .

I would have more but got into rehabbing and flipping houses and got away from the buy and holds, but I am getting back to them as they are my retirement plan.