Our goal is to fully replace my W2 income by 40 with a mixture of multi-family units & single family units.

We wanted to have passive income from rental properties.

Can you increase your income?

I would love to chat more about your situation because there are a lot of factors that would be impossible to consider here such as importance of cash flow vs appreciation, how your income situation looks (tax benefits can play a major role in investing decision making) and so on. 

I've considered both, but here's where I'm hitting a wall:Property manager: Financially, this seems like a significant chunk of the rental income going towards management fees.

However, we aren’t W2 employees, all that income is from 1099 independent contractor work, which of course will limit what financing we can qualify for.

I have good monthly income and available personal credit to float any monthly payments and even the repairs, its really the downpayment. 

Maximize your income (work your a$$ off), limit your expenses (live off of nothing), and think long term. 

And at the least, you may have stumbled onto another way to create income! 

In the US, anything with four units or less is financed using comps, not the income approach.