I performed a separate analysis using the VA loan, but I would still be in the negative (i took out the repair costs as I would not be able to do repairs).V/R, 

This house is around 700 sq/ft with a sagging roof, 1 interior wall separating this area with the kitchen, minimal floor joists, hardly any electrical and no plumbing.

@Robert Lei  Go ahead and rent it to him, but charge him rent and pay him for the work-keep the two separate. 

Should I have separate checking accounts for each property?

He puts each property into a separate LLC..."

Sale price will be a little below market value with a Home Style loan (4% down), rehabbing ($80K-$100K) mom's home into a place my family and I can live in (better schools, bigger yard, and other benefits) comfortably with a growing family.We plan to renovate the attic of our current home and make some cosmetic repairs ($60,000 HELOC) that take it from a 3 berooom 1+ half bath to a 6 bedroom 1+half bath with a separate 1 bedroom apartment that has a livingroom and kitchen (apartment is already renovated).We then plan to rent the Air BnB for 2 years and re-finance for equity and leverage to buy more rentals.

As an alternative to taking a distribution from your 401k, consider the following:If you are self-employed (i.e. active self-employment earned income separate from your w-2 income) with no full-time w-2 employees, you can set up a Solo 401k and then rollover your 401k funds once you leave your current job.

For some people, if they have an emotional connection, seeing it rented out and tenants possibly not taking care of it can be tough mentally. 

If your investing there is no emotion and you can walk away at any time.

At one time this home had 2 separate sewer lines - one for stormwater from the roof/outside drain, the other for wastewater from sinks/tubs/toilets.