Loan 1: Loan Amount: $525,000 - $75,000 funded at closing (less fees and reserve), then 6 draws of $75k asduplex is built.

To truly grasp this market, you must jump in or draw on the expertise of those with firsthand experience.

It also allows me and my wife to take a small owners draw each December which is helpful during the holidays to afford Christmas presents.

Without experience and a history of similar properties in your own portfolio to draw upon, it's just a wild guess.  

If you got a HML to finance this one - I'd recommend keeping all of your receipts from the beginning so you don't have to go hunting for them, and risk them crinkled up in the back of your car when the time for your draw comes. 

I’m in the same boat looking for 80 LTV with interest only draw period.

You could do a HELOC (Floating Interest), Hybrid HELOC (Fixed at EACH time of Draw but the draw rate is based on the Interest at the time of Draw), or a 2nd Mortgage (Permanently Fixed at Origination)I prefer Hybrid HELOCs as the rates are fixed at the time of draw and that stability allows you to plan for the future. 

Retirement distributions are considered taxable income(Federal and state).You mentioned self-managing the rental properties so it may be that the income will offset against the rental loss.However, you will still be subject to the 10% penalty.Have a conversation with your CPA and ask them to draw you up a draft of several different situations and see if that is something you want to move forward with.

Toledo's regulations are actually much worse, with a number of investors from Toledo PIN suing the city over it.  

The area you're looking in does not draw the same kind of rent though.