Great rental income, strong FICO, low LTV (60% or below), strong liquidity and PFS.

i'm just making numbers up, but if your rent on a property is $1000 and your all-in cost is $1500, and you're negative $500 a month forever, that doesn't make sense, even if you can afford to cover the $500 with cash from another income source.i also agree with not using up all your cash, but that just means you might need to wait and save up more cash. 

Financial freedom isn't simply about replacing your current income, because inflation continuously drives up prices, making a fixed income insufficient to maintain your standard of living.

I also have personal W2 income, if that matters.Is there a loan out there for a set-up like this at 15% down? 

Even if you only averaged 2.8% appreciation annually, which if you've had it 20 years I have no clue how that's true given prices have well more than doubled in that time, youre skipping over the fact that you have been benefiting from that appreciation on the ENTIRE house, not just the % you paid for.  

Pay Down the Loan Faster:I’m considering applying $40,000 annually to the loan principal.

If your new LLC is a disregarded entity (single-member or owned solely by you and your spouse in a community property state), it won’t trigger a taxable event, and you’ll continue reporting income on your personal return.

They are a great tool becuase some lenders use AirDNA to qualifiy rental income if the property is not actively an AirBNB.

Focus on tax-saving strategies such as cost segregation studies and bonus depreciation to accelerate deductions.By qualifying as a Real Estate Professional (spending 750+ hours annually and materially participating), you can offset your wife’s S-Corp income with real estate losses, reducing your tax liability.

We'd even be happy to move them into one of our (future) properties and just let them keep all/most of their rent income as free cashflow.