Re rent roll, obtain copies of the executed leases and validate collection via bank statements and tax returns. 

I understand that I will pay 10% in penalty as well as 24% of state taxes on it as well, leaving me with $50-55K.

@Dennis Hill if the house meets standards of that size family, enough beds baths and room size for children, then follow your standard rules, like I make anyone 18+ years of age qualify on their own unless they are a dependent of main tenant (prove with current tax return).

You can hear real-world examples of how others have built their investment portfolio and (hopefully) learn to avoid their mistakes.4.

I highly recommend it.If you have any other questions or need any bookkeeping or tax help, please feel free to reach out.

BUT when you're doing an arbitrage you're just getting cash flow and you're missing out on the equity and tax benefits

But there are implications to that strategy so be sure to discuss your specific situation with qualified tax expert as this is not a tax advice and I’m not a tax expert. 

They also want to avoid any liability at all cost which is why I suggested an LLC structure.

Is your DSCR ratio greater than 1-meaning are you cash flowing (according to the lender's criteria of mortgage, property taxes and insurance (and HOA) if applicable).

I use Stessa to keep track of all expenses and comes handy for taxes.