Sellers are still wanting "too much" as they typically think their deals should still be trading in the 4-5% cap rate range.While I won't pretend to have a crystal ball, I generally think: a) if you want to get a deal today, you are going to need to be more aggressive then you probably are comfortable with in your assumptions.  

I haven't found any guidance from the IRS that says that Schedule E can or can't be used for rental income from a property you don't own, but the Schedule E instructions and related guidance all seems to be based on the assumption that you own the property. 

All any of the respondents on this forum can do is make some very big assumptions based on the limited information you provided.  

So few starting investors do.First I would urge you to sanity-test ALL your assumptions (like "10% reserve for vacancy, PM, and Capex" and "5% for repairs") by speaking with experienced investors in your market with similar properties.

Recommend you first figure out the property Class you want to invest in, THEN figure out the corresponding location to invest in.If you apply Class A assumptions to a Class B or C purchase, your expectations won’t be met and it may be a financial disaster.So, when investing in areas they don’t really know, investors should research the different property Class submarkets.

The LLC question was Bill's assumption, I didn't bring that LLC structure in my initial posting because I didn't want to complicate things...but you both are right, it is part of the question (although not from, or not only from the 1031 exchange perspective): what is the best structure to hold these properties?

Really, and BTW, the assumption concerning the use of data is not totally correct.

I welcome everyone to poke holes in my ideas/assumptions/situation/etc.

So you have to give it time.My tip, play with the BP rental calculator and start with a $1M property value, 10k in rent and very conservative assumptions for rent growth and appreciation.

Again, others might feel differently here.3) property level due diligence: (takes seconds to weeks per deal): here is where I drill in with the low-level details.a) pro forma popping: I examine all the assumptions, and see if they are overoptimistic or not.