How much should I consider the impact to the higher interest rates of today?

Depending how much of the neighborhood is a hot zone for renting rather buying, and which Property type is performing better than the other (meaning 1bd 1ba 2 floor renting out faster and much more consistently than a 2bd 1ba 1 floor), you can make your choice of those factors as well as other ones that impact your decision for what you wanna do with your investment.

Although whichever option you go with make sure you're also thinking about the long-term property value and what makes the most sense vs trying different angles now that negatively impact future resale/property values down the line. 

@Isaac Terry Recommend you first figure out the property Class you want to invest in, THEN figure out the corresponding location to invest in.Property Class will typically dictate the Class of tenant you get, which greatly IMPACTS rental income stability and property maintenance/damage by tenants.If you apply Class A assumptions to a Class B or C purchase, your expectations won’t be met and it may be a financial disaster.If you buy/renovate a property in Class D area to Class A standards, what quality of tenant will you get?

After months of blood, sweat, and bargaining with contractors who seemed to vanish into thin air, I finally flipped it for $180,000.

Here's some basic copy & paste info that may help you make better investing decisions:----------------------------------------------------------------------------------------------------------------Recommend you first figure out the property Class you want to invest in, THEN figure out the corresponding location to invest in.Property Class will typically dictate the Class of tenant you get, which greatly IMPACTS rental income stability and property maintenance/damage by tenants.If you apply Class A assumptions to a Class B or C purchase, your expectations won’t be met and it may be a financial disaster.If you buy/renovate a property in Class D area to Class A standards, what quality of tenant will you get?

does it impact class of the property assuming everything else equals?

Going after their license is the most impactful thing you can do at this point IMO. 

Since you are only selling the development rights and not the entire property, the existing mortgage on the building does not directly impact the 1031 exchange of the development rights.

If it does sooner than later, or really at any point, it means destruction in the economy and if you were waiting you are probably impacted by this destruction.Rates moderate and season here for some time with opex being a persistent headwind.