I know there are some hefty penalties if 1099s aren't done in a timely manner or even at all. 

Got private money for the purchase, the rehab and even the interest payments.

Now on call 2, I take what I learned from call 1 and use them to ask better questions and speak more intelligently about the market allowing the agent to go into deeper depth which allows me to learn further and now on call 3 I know a lot more about the market and the names of the neighborhoods and now I can have an even better call. 

That even if I'm losing a bit of money every month I'm still having someone build equity for me in an tax advantaged asset over time.

Even hearing their call answering service.

To be honest, even with my title insurance experience, I can't parse out what your statement "WA-specific conveyance method of REC" means.

Could you go reinvest it in another property to build even more income?

I've included an example below to help illustrate this.So different lenders have different rates (which do vary even for DSCR loans) but these are factors they all consider.See example below:DSCR < 1Principal + Interest = $1,700Taxes = $350, Insurance = $100, Association Dues = $50Total PITIA = $2200Rent = $2000DSCR = Rent/PITIA = 2000/2200 = 0.91Since the DSCR is 0.91, we know the expenses are greater than the income of the property.DSCR >1Principal + Interest = $1,500Taxes = $250, Insurance = $100, Association Dues = $25Total PITIA = $1875 Rent = $2300DSCR = Rent/PITIA = 2300/1875 = 1.23DSCR lenders generally let you vest either individually or as an LLC.

However, by extending my search to areas beyond, such as Riverside County, I found that $700,000—or perhaps even less—could secure a 4-plex.

I would not want to move money from an after tax account to a pre tax account even if allowed.