In many ways, this is the ideal set up to get your start in REI. 

Just about everywhere you look there are new developments breaking ground and new announcements of companies moving to Tucson.

One of my partners is looking into the legalwork and comparing development costs with other contractors. 

Yesterday a realtor literally comes to the front door of my house and tells me I outbid the developer she was representing and asks if I'd sell.In this scenario am I am able to 1031 exchange the profit into a new deal?

My way of thinking was I get the house under contract, take out the loan to make the mortgage payments, and then on the resell of property ideally I'd want a large enough profit to where I can repay my loan and still make a profit. 

Maybe not ideal, but positive cashflow and have a decent amount in equity.

I'm currently a Civil Engineer working in Land Development in Denver.

Ideally you should do that in person.

I've been considering single family and multi-family (no more than 8 units), and ideally something local to me (central NJ). 

If you go this route you’ll need to start developing a relationship with a local lender.