The tenants can stay in the unit for as long as they would like subject to an annual rent increase of 1.5% provided the owner exercises that right.

Not sure what the answers are but I do wonder if the transfer is not immediately taxable in CA, whether the LLC will be subject to the $800 CA Franchise Tax Min charge, and whether CA will require you to pay income tax if you later dispose of the replacement TX property in a taxable transaction.

BP has a great book on the subject to help in you education.Be sure you understand how to estimate rent, costs and reserves to try to assure you have a positive cash flow on your first deal.Save your money and rents to make your net purchase after living in the duplex at least a year and several days from that first closing.   

Master with ensuite probably gets $1,000.I have tons of clients who use a rent by the room strategy, and we've talked about it on my Podcast....have another episode coming out next week on the subject. 

Are there towns in those states that you've been to frequently or know? 

If you make a profit the income is not subject to self employment tax.Everything else requires a separate business tax return. 

@Ryan SatchellFunny, there was a prior thread with the exact same subject header I believe:  https://www.biggerpockets.com/...

If the appraiser is diligent they can catch more, such as an addition with permits (happens frequently).  

I know I can take out the lump sum and be subject to the tax penalty for early withdrawal.

"Off market" deals are not subject to the same market forces, as a listed property on the open market.