That being said once one gets closer to their max I would sell a couple, buy a multi unit or small apartment complex with the proceeds which then dropping those few opens you up to buying a few more single family again on the loan side. 

I am thinking around 1k and our rent/utilities max is 4K.

I am pre-approved for a 3% conventional loan and would be looking at PITI+PMI=$2238/month i was then adding a total of $388/month for capex/repairs/vacancy. the plan would be to rent 4 rooms out for a minimum of $600 per room and then I would be paying $226/month out of pocket still. 350K is the max I believe it would be reasonable to pay but Ideally I would be looking for something for 300-325k that needs some basic repairs (paint/new carpets/etc) and I could be living for just about free.

I don't plan to own THAT much...maybe like 5-6 max.  I

The max is equivalent to 2 month's rent for any lease longer than month-to-month.

If so, my monthly rent would be around 1.2% of what my max I would like to pay for this property would be.

They then said multiple bids and asked for best and highest. 128k was my absolutely max I could do.

Our goal at max is live there for 5 years since the school system is not all that great with high school being rated at abut 6 out of 10.

The max is only 5.5K yearly contributions we can as per IRS limits. 

But I knew my max I was willing to do and shrugged and thought, hey, not the first I've lost and won't be the last, so whatever.