If yu claim one it doesn't void the option to claim the other one.Provided you meet the IRS requirements for both, as a tax strategy, you could complete exclude a portion of capital gains under Section 121 and then defer the remaining capital gains under Section 1031 (@Dave Foster is a great resource for 1031 exchange). ..

Fannie Mae has a requirement that if you want to use the rental income from the non occupied units, that you MUST have a current housing expense which means you cannot live rent free.

I wouldnt, so long as you have your requirements laid out - they should be able to know if it is even worth applying.

Most new construction deals require you to give up to a 10-year warranty on some items while most fix and flips come with very little extended liability after the sale excluding gross negligence which is not stopped by an LLC in any case.

This simply means you have language in your lease that states the landlord is responsible for paying utilities up to a certain $ amount (let's say $100 for the sake of argument).

It is pretty easy to keep it fully occupied but it does mean I turn away a ton of people who want a lease that doesn't quite fit my requirements. 

These are all important considerations, and understanding the requirements can save a lot of headaches down the road.

The interest rate is nice, if there was a way to increase the cash flow to ~15% or greater COC you could pull a HELOC on the property for 9% and collect the delta.again though, i would suggest selling it and trying to lock up a property or two with the proceeds that required some sweat equity, force appreciation through a reno, rent it out, refinance and repeat (BRRRR)

What documents do they require, what credit scores do they allow, how do they verify previous rental history, etc.?

Tons of double sided tape used which results in a fair amount of extra effort to restore (most cases paint comes right off the wall requiring patching sanding etc, some cases Good-off was effective.