Unless you find some more fees to reduce that to $370 you will be exposed to tax on the $10k difference so just a couple thousand there.The extra $30k of depreciation will get rationed out based on the purchase prices of your two properties.

. $360k equity (based on your estimated loan balance and estimated transaction costs if you sold, this is not calculating capital gains taxes but that would reduce your equity down to about $310k if you sold without doing a 1031 exchange). $8k cash flow (this will increase over time because you are in an appreciation market). $6k principal pay down (based on your current loan). $20k appreciation (based on 3% which is conservative, 4-5% is the historical average).

Wife and I are both self-employed so acquiring a traditional mortgage is challenging based on our "on paper" income.

This is a story from my past that provides a perfect example as to why investing in tax liens at auction is so dangerous for any but the most experienced and knowledgable investors20 years ago I purchased a SFR as a long term rental investment that sat on a double lot.  

If it came before the counsel, we'd be able to argue with a pretty strong case based on the dual-use of almost the entire neighborhood.

If you sell a property, capital gains tax applies based on each partner’s ownership share, and a standard 1031 exchange won’t work if proceeds are split, as the exchange requires continuity of ownership in a like-kind investment.One strategy is a drop-and-swap, where the LLC distributes the property to partners as tenants-in-common (TIC) before the sale, allowing each to complete a separate 1031 exchange.

@Patrick Hancock let's touch base next week

that is a perfectly fine strategy - it's just very difficult to do at a distance.as others have said, house hacking if done right shouldn't close off other strategies.hope this helps - trying to be realistic not discouraging.

I've paid for a handful of programs over the years from cheap to expensive and narrow-focused to broad-based. 

Loan interest is deductible based on it's use-not the asset securing it.