In the end if there was a problem that persists I would then look into an area rug from somewhere extremely cheap, or a used piece of carpet.

Some of the potential pitfalls have been elaborated above, but here is a direct link to the IRS rules explaining the details:https://www.irs.gov/retirement...I understand your disappointment after your conversation with the custodian and broken expectations.

If your market isn't extremely overpriced compared to some of the OOS markets you are looking at then I would consider starting out in your backyard. 

The current landlord and his wife (who was the agent in this transaction) were extremely nice and very helpful.

You can do something like just see what the difference in ROI is between a house that brings in the 1% rule and a house that brings in the 2% rule and once you do it over and over, you will start to know immediately what price to pay for the amount of rent that a house will produce because you will start to understand and find your comfort level of how hard you want your money to work (If you are comfortable with your money working extremely hard and producing what may seem like a higher return, "sometimes" you will invest in lower class areas because the price points are low compared to the rents). 

I'm sorry that my questions was extremely vauge and didn't have any details.

I can stay here and flip in jersey since competition isn’t too crazy, but I refuse to believe that it’s nearly impossible to go to Austin or Tampa or any of these “extreme competition” areas and start flipping.  

And, when I'm doing an IRR calc, I'm extremely conservative (3%/year, even in this market.)Another possibility is that it's too much trouble to forecast out and people are uncomfortable with the assumptions you have to make.

I was extremely anal; often having issues of "letting go" and things weren't going to be exactly the way I want them whether it was how the toilet paper was folded decoratively or a welcome sign with guests' names and snacks laid out in the goody box. 

Any insight or guidance that anyone can provide will be extremely beneficial and is immensely appreciated!