I originally thought it would cost $15k to renovate the remaining unit...but turns out I should 2x my budget and add some more!

The key is to remain creative, open minded, and get to know investors in your local market.

Generally speaking, they can point you in the right direction and answer questions to ensure that you remain compliant with 1031 guidelines. 

And why it is going to remain difficult for new investors to get started and scale.

If you successfully house hack a house every year for the next ten years, you can buy and do whatever you want for the rest of your life- that's WAY better than having a property that you truly desire today and being tied to a day job for the rest of your life so you can pay for it. 

What is the easiest and fastest method to remove remaining paint?

However I think you may also want to consider the position you put a short seller in (they are usually heading to foreclosure), when you tie up their property with a contract you yourself cannot close on, and you have to rely on finding yet another buyer to actually close.

@Allen GrossJust be aware, one act is not tied to another.

I assume the remaining roommate gets another roommate... what if the remaining roommate moves out, and then the only tenant left is the new roommate, who wasn't even on the original lease... who would I give the security deposit to? 

When you sell, you subtract your basis in the property (the original cost and any improvements), and the remaining amount is a capital gain.