Unfortunately the COVID situation is the excuse that some members of Seattle leadership needed to try out housing policies they have been wanting long before the emergency declaration - no late fees on rent,  no evictions for any reason,  housing payments basically optional,  landlords unable to enforce any rental agreement terms.They aren't done yet either - another ordinance is already in the works preventing us from using eviction history in screening potential applicants also supposedly temporary for 6 months after the emergency orders end,   and it also extends the prohibition on any late fees for a year.I hate to say it but I have before and I will again - do not invest new money in rental properties in Seattle without pricing in all these additional risks.   

If this property is in Oregon, there are new rent control laws that prohibit how much you can raise rent in a year. 

Many lenders frown on this or prohibit it altogether. 2) In the first several years of a loan, most of the monthly payment goes towards interest and very little towards paying down principal/building equity.

The West side seems to have much more small multifamily properties which is what I would like to get into, but the commute and traffic to get over there would most likely be the prohibiting factor that would keep me on the East side.

Account ClosedMark is referring to the prohibited transaction rules which would absolutely prevent you from putting an asset you currently own into your IRA or 401k.You can invest a self-directed IRA or 401k into real estate, but as a disqualified person, you would not be able to transact with your retirement account.

As pointed out earlier by Steve, there are local zoning ordinances that may kick in prohibiting this type of arrangement keeping you out of trouble for this type of rejection. 

This would requires a special permit for zoning relief, because multi-family is a prohibited use in my zoning district.

@Patsy WaldronNo it is not prohibited for the solo 401k trustee to perform managerial functions with respect to the solo 401k owned property.

They'd have to buy houses and demolish them but the purchase price would be prohibitive.

Following are the similarities and differences between the solo 401k and the self-directed IRA.The Self-Directed IRA and Solo 401k Similarities Both were created by congress for individuals to save for retirement;Both may be invested in alternative investments such as real estate, precious metals tax liens, promissory notes, private company shares, and stocks and mutual funds, to name a few;Both allow for Roth contributions;Both are subject to prohibited transaction rules;Both are subject to federal taxes at time of distribution;Both allow for checkbook control for placing alternative investments;Both may be invested in annuities;Both are protected from creditors;Both allow for nondeductible contributions; andBoth are prohibited from investing in assets listed under I.R.C. 408(m).The Self-Directed IRA and Solo 401k DifferencesIn order to open a solo 401k, self-employment, whether on a part-time or full-time basis, is required;To open a self-directed IRA, self-employment income is not required;In order to gain IRA checkbook control over the self-directed IRA funds, a limited liability company (checkbook IRA)  must be utilized;The solo 401k allows for checkbook control from the onset;The solo 401k allows for personal loan known as a solo 401k loan;It is prohibited to borrow from your IRA;The Solo 401k may be invested in life insurance;The self-directed IRA may not be invested in life insurance;The solo 401k allow for high contribution amounts (for 2016, the solo 401k contribution limit is $53,000, whereas the self-directed IRA contribution limit is $5,500);The solo 401k business owner can serve as trustee of the solo 401k;The self-directed IRA participant/owner may not serve as trustee or custodian of her IRA; instead, a trust company or bank institution is required;When distributions commence from the solo 401k a mandatory 20% of federal taxes must be withheld from each distribution and submitted electronically to the IRS by the 15th of the month following the date of each distribution;Rollovers and/or transfers from IRAs or qualified plans (e.g., former employer 401k) to a solo 401k are not reported on Form 5498, but rather on Form 5500-EZ, but only if the air market value of the solo 401k exceeds $250K as of the end of the plan year (generally 12/31);When funds are rolled over or transferred from an IRA or 401k to a self-directed IRA, the amount deposited into the self-directed IRA is reported on Form 5498 by the receiving self-directed IRA custodian by May of the year following the rollover/transfer.Rollovers (provided the 60 day rollover window is satisfied) from an IRA to a Solo 401k or self-directed IRA are reported on lines 15a and 15b of Form 1040;Pre-tax IRA contributions on reported on line 32 of Form 1040;Pre-tax solo 401k contributions are reported on line 28 of Form 1040;Roth solo 401k funds are subject to RMDs;A Roth 401k may be transferred to a Roth IRA (Note that from a planning perspective, it may be advantageous to transfer Roth Solo 401k funds to a Roth IRA before turning age 70 ½ in order to escape the Roth RMD requirement applicable to Roth 401k contributions including Roth Solo 401k contributions and earnings.)