You might also have rodent control and termite protection.For due diligence, make sure you get a two-year payment history for all tenants.

Or you can save your cash and use only the 1031 proceeds remaining as down payments with new loans.Either way you'll still have the option after your 1031 starts.

Hell, someone sent me an update today on sec8 payment standards in MSA where sec8 is paying dang near $4kmnth!

You only need a place to track tenant information, payment history, maintenance, etc.

I agree with the posts above, save money and make yourself someone people want to lend to.  35% equity with no money in your pocket isn't a good deal for a lender.  35% equity on top of a 25% down payment with 6 mo of reserves in your pocket is probably a much better deal for a lender. 

2) Using our HELOC to supplement the down payment.. we do have some bonus payments coming at the end of the year we could pay it down plus the tax savings could help us pay it off, so maybe it would be worth it in the end? 

@Sequoiah BriseñoCalifornia multifamily sale and 1031 exchange purchases mandate landlords or property owners to issue 1099s for payments of $600 or more to a sole proprietor, LLC, or partnership, and request a W-9 from each vendor by January 31.Good Luck!

@Noah Schulz what does the lease state about payment and what period the payments cover?

It's free, handles rent payments/reminders/late fees, maintenance requests, some reporting (e.g., P&L), tracking expenses and income, rental listings, lease signing, etc. 

FHA loans with low down payments are ideal for this.In the meantime, focus on improving your credit score and maintaining a solid financial foundation.