You'll have income of $2,800.Monthly Cash Flow is NEGATIVE $350.

I'm considering starting an LLC that I can run rental income and expenses through for the main purpose of starting a retirement plan (probably a solo 401k) so that I can start socking away some income into a tax deferred account.

Will the IRA be subject to self employment taxes (because this is a flip) or will it just be taxed as ordinary income? 

The end goal is to have a substantial amount of passive income as well as build equity, to have additional security for my family in case something were to ever happen to myself or my job.  

You will make almost the same amount of money, but you will have income years from now with nothing invested.  

I'm keeping the rental income liquid as emergency money until I get to a certain level, then I'll transfer it to investments - and I have some easily accessible cash to manage any big issues that come up with the property.My question is - I plan to buy two more similar duplexes next year and repeat the same process.

Everyone is different in this situation based on what they have going on in their life.The vacancies on a single family are hard because it will drop your income to 0 for the period it sits.

I can refer you to my investing group's financial experts (accounting firm / law practice), if you like.Where the issue may be getting confused is that the interest on financing is an operating expense for income property, but the principal portion is booked under debt service, as I understand it.

Yes, the headache will be there, but sounds like you'll have a team and if you can target 8-10 of these deals, you'll have a nice stream of income...

This is the key to me as when I do quit my day job I want to be able to add properties without needing a burst of cash or income.