What kind of property did you end up doing as your next step?

There's no way around it'; local economy does not support prices enough even if it's all outsider economy then infrastructure does not support.

I would recommend for you to list it now and see what kind of leads you will get.

I kind of doubt it since Airbnb isn't that popular in these parts. 

These kinds of developments can be huge draws for both residents and investors.

As others mentioned, you're going to have a very hard time getting a loan when you're currently in default on any kind of mortgage, HML or otherwise.

I'd much prefer to put $60K on a down payment and closing costs so I have $50K to fix it up.So a couple of questions: 1) Am I mistaken in thinking those kind of lower down payment products are out there for regular folks like us? 

We have used Axis products before, and they have great support/installation services.

Its just kind of the nature of the beast and investing were over 50% of all homes are rentals its a different lifestyle than what we are used to at least on the west coast were maybe 10% of SFR's are rentals  renters rent apartments.

These are the different properties that are included in the 1031 exchange requirement: commercial buildings such as offices, schools and different establishments that are important for the population, as well as single family rentals, multi family rentals, industrial facilities, and even raw lands are included in the like-kind.