The value of the real property and subsequent recovery from the collateral will struggle to catch up and costs associated with dealing with the default through foreclosure.

Once you catch that RE bug, it's all over!

I need to play catch up in retirement funding & the Solo 401k seems to be the one that allows the highest contribution.

I wouldn't have a problem renting to them.They want to settle down before the pregnancy gets hard to manage.They have plenty of money to cover lease breakage penalty.I see the baby as an anchor.

Do you wait until the latter year, file a 4562 and a schedule E but put the previous years dates for the tools in-service and "catch up" on their depreciation? 

I agree with original comments made, however I treated my tenants very well (probably should not have, looking back) when one of them lost job, I gave them time to catch up, but instead of paying back, they stopped paying completely, trashed the place $25K loss.

I had grad students taking undergrad accounting to catch up for an MBA and it was like busting rock getting managerial accounting through to them.

Maybe you can catch some ideas from it.Here: The BiggerPockets Podcast: Show 25

And I see I have quite a few podcast to catch up on.

Unfortunately I am on my way to business meetings and then have to catch a flight back to Texas.