This is the benefit of the BRRRR method - it works long-term, even in the unfavorable outcome of having to leave money in the deal!

Knowledge is the key to legally working with or around unfavorable government interference.

Incorrect information is being repeated, with no malicious intent, but with some unfavorable results.The simple fact is that Section 1031 concerns the deferring of Long-Term Capital Gains taxes on property that is being held for investment.  

Check with the HOA on the state of their reserves, if you don't already know, so you aren't surprised by any special assessments that come up.Here's one unfavorable and unsubstantiated thought on your "hot market" comment. 

The rent control ordinances certainly have to be kept in mind as mentioned.Northern NJ is a great area for long-term investments as mentioned by @Darren Sager but positive cash flow can be hard to come by in the nicer areas due to higher property taxes and unfavorable price-to-rent ratios. 

u signed an unfavorable contract.

Really, the Bank should pay for the Appraiser.Second, because the Appraiser actually works for the Bank, the Appraiser has no incentive to honestly and accurately evaluate the Market Value of the Property beyond the Purchase Price.This means that if you wanted to do a Re-Fi or to tell the Bank that you are buying a property at a lower LTV and therefore qualify for a better Rate, you are out of luck.The system works unfavorable to Buyers.

Hubzu has no contingencies, so I would lose my earnest money if there was an unfavorable outcome to the inspection or the title search.  

I concluded almost immediately that the SoCal market is no place for a budding investor (CA tenants rights are unfavorable to landlords, and even these rents can't net you a solid CoCROI).Have you considered looking outside your area for continued growth in real estate?

Most of the time these loans will have a higher rate (or some other unfavorable term) and then we would refinance out of them into a long term loan like a 30 year fixed loan.When we buy a property with this type of strategy it is a good idea to be prequalified with both loan types before purchasing the property.