At this point I am going to move into commercial real estate, first of with an already established personal storage facility, based on current listings I've viewed lets say I would purchase one for 1.8 million dollars, only putting down just over the down payment of 20 percent (400k) and then taking my remaining 400k and purchasing two more residential properties, one outright and  one via 20% down, holding onto roughly 200k for emergency funds.

You're already almost at 3 months, so you might be okay depending on the bank.After you establish rental income, you may be able to increase your debt to income ratio by counting the rental income as income.

If I were you I would look to very well established turnkey companies and buy very low risk products.

No long term equity gain and deal flow is running thin  .We are looking to scale to within 5 yrs, $1,5-$2m equity, $6-8m value, and $75k/yr cash flow  great credit, incredible k1 real estate investments but figuring out next stage of life  However, we are looking to take our vision, establish additional $3m personal capital, and $20m in lending value. 

Definitely needed to weed out some "sub-par" contractors before we established good processes, but now it seems to be a pretty well oiled setup. 

You still have an Abundance of experienced REO agents with contacts already established, with about 10% of the reo’s that were at the peak..I think it’s a fruitless, banging your head against the wall, endeavor, but I could be wrong.

That doesn't trigger any tax implication other than establish your cost basis.  

Once you establish yourself in the world of Real Estate there will be many sources which will present deals to you to get under contract.

They have established themselves as a relationship based lender and they will provide their clients with very competitive rates in return for a depository relationship in efforts to win your long-term business.

The max you should offer depends on the criteria you've established for your expected rate of return & how much equity to you want to have in the property when you purchase it.