Speaking from personal experience as I also house hacked last year using an FHA loan, try not to get mixed up between FHA loans and other low down payment loans. 

The 1031 exchange affords you the opportunity to shape your portfolio and add small amounts of leverage that you manage with a sharp eye to keeping your entire portfolio sustainable.I have many clients who keep a mix of debt free and leveraged properties. 

We wanted to target neighborhoods that were developing mixed-use developments / walkable downtowns, but it doesn't seem like any of the suburbs with the highly ranked schools are doing that -- is this a correct assessment?

We're getting mixed signals from banks as they don't know whether to value us as a business or home.

As your mix of properties grows, each one will be able to provide a buffer against each other.

A mix of the two? 

I think that would put you right in the mix of all the purchasing options and you will be aware of a lot of deals before they come on the market.

I am a mix of emotions on this one I guess.

The only thing is you need to consider is will a mix-matched kitchen and bath with outdated appliances, cabinets and fixtures will that negatively effect the rental rates you can get in your market.

Mixed up the monthly cash flow with the NOI.