One idea is to proceed with the 1031x, save on the capital gains, parlay your proceeds into income-producing properties, and capitalize on the low-interest rate offered by these operators.   

Since they are 1099 independent contractors, payroll taxes are not paid by the brokerage so agents have to pay about 20-30% out of the portion of the commission they get to Uncle Sam for income taxes, depending on their tax bracket and individual tax situation of course.

I'm not looking to replace my w2 income with it.  

So what's 17% "passive" income look like?

I'd add a late fee to the lease renewal, but if they are struggling to pay rent now, when the baby comes, they will be down one income for a bit and then have child care, so will likely have more problems. 

and I'm still sitting here trying to figure out how I can classify all my income as tips.

I owner occupy the home, renting a room to a friend at $650/mo, and the lower unit rents for $1850/mo - total rental income of $2500/mo.

Income tax refunds!

Quote from @Brandon Croucier: 20% down is terrific on land.It’s a non income producing asset which has increased volatility, typically I see 65 LTV max on land as of late.Thank you Brandon!

If you are looking to use rental income instead of personal income to qualify for mortgage, you'll be looking at commercial financing.