But if you get to keep it and make say 10% a year (just cause it's easy math for me) then that's $700 a year you get to use for yourself. 

Using the same math you would net $8k/year per property (instead of $16k because you have mortgage payments now) so you would net $32k/year which is a 16% cash on cash return.  

Well, BP keeps saying that if you use the systems and do your homework, you can be successful so I will have to get grinding and stay focused.

In doing some math, now I'm leaning toward keeping the money in the 401k, and coming up with down payments for REI elsewhere (lines of credit, patiently waiting for cash flow to accumulate, profits from flips).

I enjoy math and oddly enough some people pay me for it so let's take a very quick and basic look.  

You have to get good at the math behind it.

Hey @Jeremiah - seems like a simple math problem.

Now I know this is a huge huge gamble, and it is a negative investment initially but I am bound to my clients here in SD for at least the next 3-5 years and doing the math if I continue to rent at SD prices, I can see clearly how I am not paving the path to any kind of financial freedom and I am not taking advantage of San Diego's tremendous appreciating market. 

With those numbers, yes that would be the resulting math but consider your rent and loan -> 1400/154000 = .9%....slightly below the 1% rule.

Math teacher or tudor