After expenses, it will be cash flowing 1k/month.My thought of doing a 1031 exchange seems like an option..trade in a 170k house for a few 250k homes and increase my portfolio by 600k.

Here in Illinois, people are required to have a license.

The sellers agent would not be required to tell you as the buyer (or your agent) the terms of the other offer or what the seller finds appealing, his job is to get the best "offer" for his seller, not necessarily the best "price".

It is an operating expense of the property, so yes it gets "written off" as an expense. 

Does anyone have any experience with the cost ballpark and requirement to do this with a single residential (not multifamily complex)? 

Hello, Albert Lubin, the 50% rule is a general guideline used by real estate investors to estimate the operating expenses (OpEx) of a property as a percentage of Effective Gross Income (EGI).

The property has since increased 82% in value, we use it frequently as a family for vacations and weekend get aways, greatly minimized my RMD requirement, break even each year on my taxes, etc.

However, @Bruce Lynn provided a great reminder to remember all of the expenses that could be included in your cost basis; again, a CPA advising you specifically would be the the best bet.

So, as long as you have at least 5% down AND the second lien meets these requirements Fannie Mae second mortgage requirements  you should be able to do what you are looking to do. 

Do you require tenants to add the difference to the last month's payment each year with a rent increase?