Then, I would take a small (or large) portion of my income (from work or other investments) and put it into Vanguard mutual funds.  

The layout lends itself to dividing the space in one or both to 2 bed 1 bath units and still be decent sized.

why don't you just request an extended escrow and maybe release a portion of your earnest money deposit?

I've gotten some really dumb financial advice from money managers, and every time I've hired one I've outperformed him/her w/ the portion of the portfolio I held back to self-manage.    

As long as you don't buy a clunker, you should be fine selling within a reasonably amount of time (assuming the market is not completely out of whack).If you have your own business, you can write off a portion of your home ownership costs if you have a home office (and some mortgage interest too).

There are a large number of small offices tailored to tenants who need a home sized office but do not want an office at home.

But I really want to get started in REI and am considering using a portion of my 401k money to pay for the downpayment, repairs, etc on my first flip and maybe on my first rental as well...

Hollow core doors are a nightmare especially if you need to trim them to size to retrofit inside an existing old door frame.

San Antonio is a good size market, but I have intentions of working in the surrounding areas as well (New Braunfels, Cibolo/Schertz, Canyon Lake to name a few).

It would tough for them to sue you for the security deposit if they failed to meet their obligation, and you followed state guidelines for itemizing the portion of security you retained.More realistically, something to consider is that you do run a risk they'll sue - especially if there's a case the door was a safety hazard or there's a state statute that allows them to break the lease.