By this time we will have a couple of passive income streams from sources outside of real estate and can supplement our income with the real estate income. 

@Brian Henry , Note: A taxpayer's dwelling used for personal purposes for more than 14 days during the year, or more than 10% of the number of rental days if greater, is considered to be a residence.Also, a property generally is considered used for personal purposes if it is used by a member of his or her family.However, the dwelling is not considered used for personal purposes if 1) Rented at a fair rental price to a family member 2) Member uses it as his principal residenceA residence with a combination of personal and rental use is considered a Property with personal use and vacation home rules apply.So two cases: 1)If you meet the requirement is the case, the property will be rental and you can deduct all the rental expense and depreciation.Income: report all Income, even from son.Expense: deduct all the income.

Scratching my head, they only thing that I could figure as a benefit to a ROTH (for my situation), is that over the years as my portfolio grows and income stream grows, I would be able to choose how much to receive in income.

I'd love to find a property with a garage apartment, accessory dwelling unit, or a duplex to live in while also being able to have a renter pay for most of my mortgage.

If minor cosmetic updates, I would think offering 45k on a property that’s only 65k seems like a steep drop, especially for a duplex that seems to provide a very solid stream of cash flow. 

We are interested in executing a 1031 exchange into a higher cash on cash return profile multi family property to diversify our geographical exposure and income streams beyond our W-2s.

Problem is they want more rentals priced between $500-600 for 2-3 BR. http://ijpr.org/post/housing-committee-works-spur-building-grants-pass#stream/0

There is no green card for 2 family, only 3 family+The Bureau of Housing Inspection is the agency responsible for multi-unit dwelling, you can see more below.

Do you have a lender in place who will refinance a MF dwelling made of shipping containers? 

Obviously, your project isn't a new build, but this might be an approach for you to consider in some cases (especially if this project needs all new systems).Moving from this deal into mindset; remember that you started (many never do), so all you have to do is find another deal and keep this momentum going, so please don't dwell on this property just keep going and try your absolute best not to make the same mistake again.