I don't think deciding to do a 401(k) versus starting a business (real estate) need to be mutually exclusive, and in many cases once you get to "retirement" those qualified accounts can be a useful income planning tool, especially if one funds a mix of Roth and Traditional balances. 

Hi Sean-If you are self employed you could do a Bank Statement HELOC or Bank Statement Cash Out loan, or find another alternative way to qualifyIf there is no income at all, then that may be challenging.

How has that changed in 2023 (going into 2024)  considering the higher interest rates and economic inflation from late 2022 through 2023 and stress on banks?

so for me, his offer is not a "good deal," because it now requires that bank loan-like outlay of cash.i guess if the loan term were shorter it might make more sense - like just 2-3 years of payments. 

And you are thinking about things correctly - for instance taking into account the fact that the area closer to Nashville is growing faster and therefore could bring you higher returns.However, Benjamin Aacker made the most important point - which is when there are numerous approaches its hard to choose when the end goals aren't clear. 

Best practice is to advise them to get counsel from actual professionals; estate planning and planning in general is not a great DIY hobby it would be beneficial for you to have contacts like attorneys, accountants and advisors to refer your clients in this case.   

Had long term tenants I wanted to keep so didn't really keep upping the rents alongside the rising HOA costs, so I looked at it as a forced savings account just kinda breaking even, but enjoyed the tax benefits.

I would first create a separate account for expenses both Capex and small things (need new faucet, lawn sprinkler, etc.). 

In their note to the seller they also acknowledged they paid rent late.The previous owner had two strokes and wasn't in a position to provide me with much information with regards to whether he kept the deposit in an interest-bearing account.

Refinance the mortgage down to the 75% LTV which will save you 1% on the rate but deplete some of your cash, then use a HELOC to recoup the 5% + gain an additional 5% if you find a bank, (Bangor Savings) that is able to lend up to 85% LTV on primary residence HELOC's.