Rate will be lower with a higher down payment, so you'll cash flow more, but look at what you're saving by using that as a down payment vs. what you'd gain by putting less down and and using that towards the next property. 

Once I’ve gained rental income, I would like to finance a Condo and even more rental properties with my income from rentals.

However, past performance of appreciation is not necessarily indicative of future gains due to variables within each market.

What is your potential appreciation gains and how far out?  

You cannot (legally) exclude your capital gain when you sell your NJ house next year. 

Real estate investors are attracted to medium-term rentals to gain the benefits of extra cash flow versus long-term rentals while avoiding regulatory risks, high turnover, and intensive management of short-term rentals.While many investors are now turning to medium-term rentals to build their portfolios, the lending world has unfortunately been a little slow to keep up.

What is something that you thought was true about the real estate industry / investing, but turned out to be different  / not true once you actually gained the experience?

You might lose more than the taxes if you’re in the 15% capital gains bracket. 

My understanding is the seller bought with seller financing significantly below market value and has the capital to pay the near due balloon if needed.The seller is the one who proposed SF due to (I assume) capital gains. 

Fix n flips are typically dealer status income not capital gain.