@Brian SchmelzlenI have worked with real estate investors whom have been able to benefit from ITC tax credits for solar on their rental properties.

Assuming Colorado is similar to Wisconsin in adopting existing leases upon purchase (I have no clue if this is actually the case for Colorado), you'd essentially be adopting the lease you created.Again, this is not coming from experience and isn't legal advice, just the initial idea that came to mind while reading your post.

I see a couple of benefits from this approach:1.

What are the benefits?

Will I essentially be taxed on the sale of Property #1 ($375k - $280k  totaling $95k profit) regardless of the $56k (showing as equity in Property #1) being from another loan? 

We have the added benefit of being just a couple of hours from Moab which is maybe less attractive in the middle of summer, but an exceptional place for spring or fall adventures. 

Otherwise FHA or Conventional are your options if your income is over the USDA limit.FWIW, I would go FHA or Conv and save your VA benefit for the next one. 

It's my hope to develop a strong business relationship, which can mutually benefit us both. 

Though I still need to learn more benefits of 5+ over 4 and below.

Is there any benefit to the author (or me) if I purchase through your web site?