What is she doing now in terms of paying for housing? 

If you can buy a 4 flex that will allow your tenants to pay most if not all your mortgage. 

This is the first time I have done something like this, where it was for other reasons besides not paying rent. 

Hello BP,The Producer Price Index (PPI) is a valuable metric to monitor, as it measures inflation from a business perspective (what businesses pay for services/goods) that isn't always reflected in the Consumer Price Index (CPI) or "inflation" which is commonly discussed in headlines and among other investors.

I'm willing to pay retail or close to retail for properties in 'A' locations.

Keep in mind that all this time we were living with my parents paying them rent but saving/starving to score our next deal. 

You pay 10% penalty plus taxes (lets say state and federal of 25%) - so you are paying $70k in taxes so your $200k is now $130k.

It said this is pursuant to tax code section 23.55It said I can protest in next 30 days1) Does this mean we have to pay taxes and interest for prior 3 years?

I needed some extra financing on my first rehab and opened several 0 apr credit cards which I used for materials and payed them off before any interest.

Reporting the proceeds you pay to seller on a 1099 sounds reasonable.