I have used several methods that have been quite fruitful over many years. 

Payment methods, tax collection etc.

Not plus 40k.  40k down payment. 

I like the one that requires payments to be deposited in an escrow account:New York state law requires that consumers receive a written contract for home-improvement work that exceeds $500.

Question is, if I have the means to put a high enough down payment on a house to be cash flow positive (assuming my expense estimates are accurate, etc.) is that something that I should do?  

HI Jewell,If you were to use FHA again, this could trigger the FHA 100 mile rule + 1.75% upfront fee, however with a few exemptions Indeed FHA allows you to put 3.5% down payment to invest in 1-4 units.

I'm basically looking for input in the following:Option 1: Buy a couple of properties and split the money from the 1031 exchange for the down payments.

Quote from @Lionel Quiambao:  ... and maybe throw in the option for the tenant for more speed at an increased rent to cover the additional payment. 

The only things that matter are credit, down payment, reserves, and DSCR ratio! 

The BRRR method is not about "numbers working" in a given market.