Maurice Colbert - Sell the home to get the tax credit Robert Ellis mentioned (any profit is tax free) then invest the cash in your choice of diversified stocks (I like MO - Altria / Marlboro which pays a 4-5% dividend and has appreciated 10-15% each year over the past 5 years) using a low cost provider like Scottrade and its free dividend reinvestment program.

And one you cannot increase by making the wrong choices. 

I came to this choice after trying out the typical W2/9a-5p job and coming to the conclusion that it wasn't for me.

But for someone looking to replace their income quickly, without a big bank roll,  buying a 400k house in silver spring or Rockville probably wouldn't be the best choice

That's it, those are your choices.  

There is something about paying more taxes when you sell with a S-Corp or C-Corp  Here is a good tool to help you figure it out http://www.mycorporation.com/entity-choice-wizard/...

In general I would suggest making the choice between [ LLC+CommercialMortgages ] or [ Person + ResidentialMortgages + UmbrellaInsurancePolicy ] one time, and sticking to it.

As it pertains to me, just starting out, I was looking at starting an LLC for a few reasons but the further I dig into it, I'm not sure it's the right choice.  

If they pass screening and you have no other choices make sure you only have them on a M2M lease.

So many choices: 1031 into units, JV with a developer on a build project, buy three other SFRs at around $250,000 each getting close to the 1% rule.