Overall, I expected to pay no capital gains tax seeing as how we lived in the house 4 years out of the +5 years I owned it.

I owe $345,000. after paying the mortgage and all utilities I would cash flow $500/month. 

@Michell ChaseEvery state you own property in you need to register as you will eventually have to pay state taxes as well

I want to pay that debt off and  renovate the houses.

Pay Dirt Flips is her new business!

Forge Trust is my custodian for the self directed IRA with checkbook control.Be aware of possible UBIT tax if you use leverage for the purchase any property. 

If the tenants are being picky, it is also possible that they are being picky because of the shortcomings of the PM so they may not be able to (understandably) trust that the unit and carpets were actually cleaned. 

The state is Florida.I did not consider this first mortgage an issue because I was simply going to live rent and mortgage free in this property myself, rent bedrooms, make good money and recoup my investment in short time (netting 4k income per month if you count not having to pay my current rent).

The extra fees for every little thing are a huge turn-off - $35/day for heated pool and be notified a week in advance OR pay another fee - no thanks. $75 for propane usage - I can go buy a small grill and tank for less than that - again no thanks. 

Out of area investments do require a trusted team of people that can help with the management.