No problem with down payment but will need conventional load which is not a problem as I have been pre approved many times just did not find right property.

How much cash have you put into the deal so far?

But if you do want to invest out of state where cash flow is higher, I think it's worth narrowing down where you think the best markets are and then find a way to take a trip for a couple days or so. 

Contrary to most business lending, the REI industry has a lot of "non-bank" lenders that provide attractive loans that can lower your cost of capital and improve your profit/cash flow. 

Alot of unknowns as you don't have the ability to walk the property beforehand, but interesting process, and pretty good deals exist there.While the Trustee Sales are cash purchases, there are many hard money options that can turn over the funds in time for the 24 hour funding required to complete the purchase.If you are interested, let me know and I can go into more detail, as well as make some other suggestions for you to consider. 

We need the cash to mostly just tie us over untill we sell the property, so 150,000 is on the upper end; 80,000 and above would probably be sufficient. 

There are mortgage recast calculators online or you can reach out to your lender.P+I payment will go from 2155 to ~1800 given the numbers you provided.

Here are a couple of ways you could structure the deal:Lease Option with Seller Financing: You could lease the property with an option to buy later, allowing you to rehab it while giving the sellers time to find a 1031 replacement property.Seller Financing with Deferred Payment: Structure the seller financing with no immediate payments, allowing you to refinance once the property is appraised, and the sellers can complete the 1031 exchange when ready.Escrow Holdback: Transfer the deed into an escrow account, giving you control without immediate transfer, so the sellers can take their time with the 1031.Third-Party Facilitation: Use a qualified intermediary to hold funds and facilitate the 1031 exchange while you refinance.These options allow flexibility for both you and the sellers.

Mostly people with minimal RE experience are adding a single ADU and they often make that choice based on cash flow without taking into account the negative equity position.  

You can live in one unit and rent out the other for little to no down payment.