GRM and cap rate both looked great, but when we pulled utility records, we found heating costs in winter were brutal because of old, inefficient systems.

Title report, confirm utilities and zoning etc. 

One idea is to proceed with the 1031x, save on the capital gains, parlay your proceeds into income-producing properties, and capitalize on the low-interest rate offered by these operators.   

I would say don't be afraid to utilize the equity line again.

I don't think the windfall is as big as you say, or why would you care about large downpayments on income-producing assets that would appreciate over time?

I'll do that when I meet my investments are producing my final goal of $X.

I have recently started utilizing this platform for just that and I've already had some great conversations with people here. 

Seeing as they have full utilities and stick built, they should be categorized as real property and have good value for their size.

Or find a property that is under-utilized or has below market rents.Otherwise, you could also do the OPPOSITE of the great advice from @Jonathan Greene and buy a property with multi-bed units or live in the larger unit and rent out the smaller unit - while getting a roommate(s).

That's just the max they will pay for rent plus utilities.