As an out of state investor, I made the decision to pull my equity out as construction costs in the area are incredibly high with limited availability right now.I completely agree that luxury rentals would be my prime target for a 1031.

What I mean by that is for instance in a place like Newport Beach California where houses cost millions to buy there may be apartments available for 2000 a month, which is way less than the per square foot of a purchase.

What does something like that cost?

If it's buy and hold make the landscaping low to zero maintenance to save on costs or having your tenants be responsible. 

But we have a 2.25% interest rate on this house that would cost a lot to try to buy down to that rate in today's market.Just something to think about as you are looking at properties, maybe ask the seller or listing agent if it is possibly a VA loan and how you might be able to make a deal if they have a great rate already.

Remember, the cost of a mini split is really driven by the number of head units inside and not the outside unit. 

We work hard cut costs as much as possible, everywhere that we can. 

Now that there is no overhead cost of the mortgage, how much should I charge my tenants?

My main concern is the cost of turning the property into a MTR especially with this being my first property.

The contractor will be your best resource to understand cost of the design; the earlier you identify value engineering opportunities, the cheaper it will cost to incorporate (Google: ‘Macleamy Curve’).