There are two steps involved First, what you need to do is: A) First figure out your casualty loss ( even though you received the money form the insurance, they usually pay after your deductible amount, the deductible amount could be your loss, at the least.

My capital is $480K cash on hand, I want to be totally involved with every aspect of the transaction. 

The past is the past.I would also point out two things based on your comments that may indicate why you chose to go in a different direction.  1) The use of a self-directed IRA custodian - where they have to sign every document and cut every check - is not well suited for a portfolio that involves a lot of assets or assets that create a lot of transaction activity. 

The properties are in good condition, aside from cosmetic work and cleaning in the units.

They didn’t drag it out, they cleaned the unit well and moved out within the 30 days.

A spot has opened up in a successful realtor business in my hometown.I’ve been thinking about being a realtor for awhile now and I think I will be jumping the gun and do it.I plan to work super hard, the owner is a good friend of mine, I have a lot of connections/friends in the area, know the area, and have a lot of passion/drive.I am looking for something to become more involved in the realty, have more cash flow, and be able to work hard and not be limited to a hourly wage.

I’ve also started becoming the “boots on the ground” for some out of state investors to really get involved in renovations and property management and to further create networking opportunities.

-HVAC -- you have to get a receipt from a HVAC contractor saying its running clean-Bathroom tub needed more caulking around the edge, to prevent water from reaching subfloor-Toilet was running-a Window wouldn't hold itself up, which ended up being a pretty expensive repair. 

I know banks want to see reported taxable income and I don’t want to cause any red flags or have IRS get involved.

If you want to be a realtor you definitely need one if you want to be an investor it is optional..Also keep in mind there will be fees involved.