The limiting factor right now is not speculation or a lack of euphoria--it's simply affordability. 

Factor in carrying costs (utilities, taxes, insurance).2.

Those are some factors that will determine your returns.

I guess it's just too many factors to consider and it easy to get overwhelmed and cannot get accurate info and estimation when I conduct analysis (ex. property tax rate, insurance, maintenance fee, rent, repair, closing cost, etc.) 

An LLC is potentially one minor factor that might contribute to the evidence that you are running your rental activity as a trade or business, but it's definitely not required that you have an LLC to qualify.

Does size of mortgage paydown become a factor here?

If your goal is passive income, it's not going to be in New Jersey when you factor in cost to purchase, management costs, and rent to price ratio, but what you can get is steady appreciation.

A lot of the owner occupy loans require you to live there for at least a year, so it's not forever. 

And just so you know, here are some of the factors an agent will look at to figure that out:Market Conditions: If the market is slower, going all in on staging can make your home look move-in ready and attractive to buyers who may otherwise be hesitant.

We recently purchased our "forever" home together in another county and applied for a homestead but of course we were denied because they found out we had 3 active ones in another county.