Certainly not afraid of it -- the government red tape is Partly a question and difficulty removing a bad tenant is probably he biggest downside - that goes for any property though.   

I only sold a few amount of properties but the values of the homes have increased.The government is making less affordable homes(Impacts supply)A lot of the points you suggested such as selling costs and having to rehab the property before sale apply to both cheap homes and expensive homes

It just seemed like a good strategy since these were government backed rental payments

The 1031 will let you get there using the tax dollars for your benefit rather than paying them to the government - a big bump to your net return.

Can you go ahead and change that (think address of record for LLCs or bills for other properties).Make sure any HOA and the local government allows for your home as an MTR.1 last point to add to Jamie's first point: if you can, take a video tour of the home and what you're leaving behind.

Hence the scariest word's in the English language; "I'm from the Government, and I'm here to help".... 

If I do this, will IRS (or any other government entity) start looking at me and wondering what's going on?

Government AgenciesGovernment agencies can also foreclose on properties.

However, my take on this is they did not do sufficient due diligence on many fronts, including city government challenges, operating challenges, infrastructure challenges and marketing challenges. 

The number one employer is the state government, because the capital is next door, and the number two employer is the federal government, both are not cyclical and don't fluctuate, if anything their job base increases.