I would like to roll a couple of 401Ks that I currently have from previous employers into a self directed IRA and use those funds to buy and rent out a property to generate some cash flow.

Just your post @Claire Trammell Helped me generate some fresh thoughts and 'content' and on a roll.

I'm interested in long term holds to generate passive income for both my children and my retirement (in my 30s currently). 

I ignored Cap and concentrated on the NOI generated. 

You are absolutely right, in that your 100% cash payment is essentially equal to 2-3 downpayments, generating a hefty multiple than 1 house. 

Can you generate this return with less effort / work?

It's amazing that people take their aggressions out on their homes...My generation was raised by depression era parents who really valued having a home more than anything,  and paying it off asap.  

What's the best way to generate leads out there.

There is also a different mindset in the millennial generation.

In my opinion, converting existing living area into a 4th BR on a 1,200sf house with 1 bathroom wouldn't probably net me any additional money on the back end or even likely generate any more interest than it otherwise would as the same sized 3br/1ba.