I understand this amount isn't excessive, but I feel like I need to take action so that I can understand the process better when this occurs again.I provided the tenant with a move-out letter and inspection report on August 2.

I have high income and generate $150k in excess earnings per year which I used over the last few years to build my investment portfolio.

Use your excess funds to buy more property. 

I do not currently have a lot of excess cash to make downpayments on a home and am looking for alternatives to start investing more in to real estate. 

At this phase of my life, moving the money into a DST that makes 6.5% cash flow per year, or in excess of $3500/month with no HOA or taxes to pay makes more sense for me right now. 

If using zero down finance, you have no out of pocket and you can have your tenants pay the monthly for the solar system (with a caveat that if they use excess power from the utility they are liable for that).In that scenario, you've added value to your home, your roof is an income producing asset instead of a liability and you are having that paid for by other people.

I feel people will give up neighborhood amenities and excess sqft before they'll sacrifice bedroom count. 

Two main reasons - first to stop excessive inquiries on your credit and also to not draw on an unsecured line of credit for funds.

I don't think 1% is excessive. 

I personally hold 5 CFD's with values in the low 30's but  valuations in excess of 70K on each property.The reason i like the CFD's are that in the event of default, as a general rule, you don't have to foreclose, just evict which is much lower cost and more important to me faster.If the borrower defaults and I have to foreclose, I can turn around and sell the property again at an updated price.Since i only paid in the high teens for each of the notes, the downside is something I can live with.BTW, all notes are fully performing and I'm getting an average yield of 28-32% and have about 250 payments left.Final comment.