Primary residence capital gain $250,000 exclusion.  

You can use the 1031 to sell a larger unit that provides better cash flow while minimizing active management.You can either try to cluster those sales together so they close in a way that lets your replacement property be listed on each 45 day period and you close on it within 180 days of the first sale (the first exchange that will expire).Or you could do something like a reverse exchange where your Qi purchases the new property and holds it for you for up to 180 days while you sell all of your properties. 

Quote from @Nelson Badillo: In my experience, HUD requires you to provide at least three comparable properties to justify your rent.

Arbitrage provides all of the hassle but none of the upside.

Lets go over your questions one by one and provide some general thoughts based on your goals1.

Do I need the seller to provide me with the mortgage documents and have a lawyer review?

If you want cash flow to live off of, pay cash for properties; however, the S+P 500 provides a better historical return than rental properties bought with cash. 

Not mentioned, is recognition of other opportunities that a well-secured note may provide strategically, if placed well.

That doesn’t mean they’re bad tenants—many are just trying to provide stability for their families—but it does mean you need to be extra diligent with screening.

A good broker remains transparent throughout the process, providing regular updates on loan applications, lender responses, and any emerging challenges.