I recommend discussing your strategy & financing with a lender to make sure you could qualify for both FHA and then an investment property loan.

You cannot use rental income above your mortgage payment to help qualify for a larger mortgage, but you can utilize 100% of the lease income to offset so that should help you qualify for more of a mortgage. 

@John Zhang If your wife qualifies for Real Estate Professional Status (REPS) and materially participates in managing rental properties, there is no limit on the amount of rental losses, including depreciation, that can offset your W-2 income.

For others who don't qualify for REPS or have a W2 job/long term rental the depreciation might not be able to be used at all.

For instance, I had a 72 unit apartment deal where surrounding homes in the area were $130k and because of this I couldn’t push rents to where I wanted them to be because qualified renters could just buy a house for around the same monthly payment of my two bedroom apartments.

That is the same way a lender would qualify someone for a mortgage.

Unfortunately, we don't qualify for RE professional and this is a long term rental.

Germain Act could work if you qualify, but if you can’t refinance right away, you’ll need to consider future plans.For whether to sell or keep the properties, selling gives you liquidity and eliminates mortgage obligations, but you miss out on future appreciation.

Does it need to be converted back in to a rental after your 2 years to qualify for a 1031?

Behold another subprime housing bubble.The problems began when the Obama administration eased underwriting standards by enabling more home buyers whose debt payments exceed 43% of income to qualify for government-backed loans.