However, if you aren't intending to return to the area and don't see a positive (in $$ terms) exit from the property (enough to make you want to keep it) than I would cut your losses/take your profits and invest elsewhere.As for purchasing in a new area...if you intend to stay in the area then buy nice house for your family.

As soon as start profiting from Rehabs then I'll be diving into rental properties as well! 

According to my estimates, this would result in a gross profit (cash flow before mortgage payment) of about $65,000 per year, which is just over $5,400 per month.

Keeping that in mind, that is the only place where it may be profitable for developers to build affordable housing.

The question is will I be screwed since I didn’t trade up even though I spent all the profits and took no cash?

Additionally, what is the damage in already having had deposits of profits direct deposited into my personal checking account?

We built spec homes in the early 2000’s, which was very profitable, but we all know what happened to that market.

I figured I'd give house-hacking a residential duplex/triplex a try first to get my feet on the ground before tackling something bigger (though definitely want to go for bigger properties eventually, economies of scale make it more profitable I'd think)

Any house in San Jose is going to be worth far above that, so whatever back taxes are owed would usually just come out of the seller's net profits at closing.

All the info and help you need is right here, without taking half your profits!