We plan to convert the sale proceeds into multiple properties to create passive income. 

I'm anxious about making any financial mistakes that will cause me to be in hot water with the government since I am not sure how to report income from an investment property. 

Side question, assuming that you have a pretty strong income from work, would you hold your commercial real estate as long as you can and to by another on top of the existing one or would you 1031 to a bigger commercial real estate instead?

I am a 29 year old male, married, with joint income living in Dallas.

Use any CPA and treat it as normal income. 

It appears they calculate gross ROI based on gross income divided by property price.

If they don't have documented income or so, you're out of luck.

Another way to look at it also is if you have a rental and you can increase rent by $100 and sell it in a year for a certain value, are you better off selling it today at another value or holding it for another year and collecting income?

Let's delve into the situation you've outlined:If your rental income exceeds the 27.5 years of depreciation and deductions, resulting in a positive net income, you are correct that this surplus becomes taxable income.

Typical rates are 8-12% of income either monthly or yearly depending on manager.