It’s a much different stress position. 

I did 1031 in the past once and even though it is a great option to differ the taxes, the pressure to find a replacement in a limited time was a bit stressful for me.

Annual leases gives me less stress over vacancies and turnover costs.

Putting in new/more insulation is also relatively cheap and once this project is done you will be way less stressed.  

That's an anecdote, but it highlights that there's nothing special or magical there, lots of regional banks made similar decisions in 2020, and the big banks too: for a while, Wells Fargo would only do your "jumbo" refinance if you had $1,000,000 in a WF account. 2020 was an interesting "stress test" for a lot of things, it turns out.

This negative value adds to the positive W-2 wages to reduce the total income?

If you're buying in a C/C+ neighborhood demand will be high and so will prices, but the stress level as a landlord should be lower. 

These are both 3% down loan programs with reduce MI or Mortgage Insurance multipliers, however they have income limits, so you need to know if your income is at or less than 80% of AMI or Area Median Income.

That would have put me into an area where I wouldn't feel comfortable and I'd be trading the short term stress of 'shoulda could woulda' with the long term stress of 'am I gonna be able to make money on this?'

Yes, it's clear now.I'm buying a house with all cash I have to reduce the price (to have the biggest possible gap between the purchase price and ARV), then I'm planning to do the cash-out refinance to purchase another property and use the income from the first to pay of the mortgage of the second.