(As a side, our 1031 clients chose Texas markets for their replacement properties, not the Midwest.)Last, but not least, my concern with many California markets is the downside risk in the land values as being grossly over inflated.  

property #1 is the better cash-flowing deal, the only downside is the high up front cost to get into it, which will take a while to recoup and limits my 1-2 year plan to procure another property 

Downside is your chasing tenants non-stop....

The problem with getting advice from attorneys is most attorneys know the basics about many things, but they do not know the downsides and do not focus on explaining the downside because just like us investors the attorneys start to learn the downside to most things when things don't turn out as expected and after you already took a loss, or when you end up in a lawsuit.

I see no downside and potential upside if it makes the platform one that makes those who would discriminate have to work harder to do so.

Versus putting all the eggs into one basket.The downside is that someone has to be comfortable with turning over control to someone else.

I dont really see a downside to it myself, in moderation. 

The biggest downside of the turn-key strategy is that you are not necessarily getting "equity" when you buy a rent ready home. 

There are some downsides with fees and such so research completely but I was blown away by this option.

The downside to Bank Statement loans: higher rate and 10% down required for owner occupied.