., I left Anderson for a small firm that will do the actual taxes and then another company that specializes in tax strategy. 

Often times you will pay much more in taxes than if you pulled the money out, paid the taxes and penalty and then started investing in real estate.For example, with the financing you mentioned, the IRA must pay taxes on the portion of the profit earned by financing. 

@Anita Z.I recommend finding an accountant who specializes in real estate taxation, tax planning and financial planning.

Malibu allows it but requires a 15% "hotel tax" on the gross revenue.I would recommend looking out of state or underwrite the property as a long term rental in the event laws change.

@JD Martin taxes and insurance are not debt.

There will be no assessment for increase in taxes or insurance so remains at $1935.

I didn’t see your location in your profile or your post, but assume at least 17% state/federal taxes leaves you with $10k/yr. 

Today was the final straw for me as I have come to realize you can not get a transaction report that shows a breakdown of deposits so I can show proof of rents received to my lenders.

The information provided is based on my experience and industry knowledge but should not be considered legal, tax, or financial advice.

Imagine making millions of dollars over the course of your career and then having to pay 30-50% every year to uncle sam instead of compounding that cash over time.This is exactly what real estate professionals have learned to mitigate.To reduce their taxable income, they just buy a building every year, do a cost seg, and use depreciation to reduce their tax liability dramatically.Their personal wealth snowball grows much larger and much faster than their W2 counterparts who give most of their money back to the government each year.Following this strategy as a real estate professional is one of best ways to end up with a much larger net worth at the end of your career.