You are significantly DECREASING the amount of risk you have once your property is paid off in full!

It gives us a fresh start financially by rethinking/decreasing our housing expenses and future investments. 

However a 1031 increases cash assets and decreases illiquid assets.  

Perhaps comps would show sales price decreases by 10% but rental prices only decrease 5%.

market statistics show that rents are falling in the Houston area. 6% lower than a year ago. inventory for sales is at the highest level since 2012 at 4.4 months. while prices are still barely going up on average, their rate of increase is decreasing.

So let's assume that you can use that new commercial designation to justify a value increase (it would suck if you did all of that to have a decreased value).  

If they need rehabbing you will be in a much better position to decrease rehab expenses and maximize profits.

If the building is really old it might be better to tear the whole thing down and build new.Look up crime only for the area with violent versus non-violent crimes and see if increasing, staying flat, or decreasing.

If you have ways to add value to the property (either increase income or decrease expenses), you can purchase this at 6% and then raise it to a higher Cap through value add.

When rates were decreasing and even stagnant this strategy makes perfect sense.