They take a bit longer to close but they typically DO close.I think you might be limiting yourself too much by requiring cash only and not listing them on the MLS.

Doing a 1031 only just moves your equity in real estate around with deferred tax liability.You have competing requirements. 

@Chris Dawson What I'd guess @Basit Siddiqi is saying is that a single SFR does not require a level of involvement that, in and of itself, can possibly satisfy real estate professional requirements.

There are lots of Youtube videos that go through the details for Inspections and Reserve Requirements here.

One we just took on under management required a $175 admin fee to register the condo as a rental with the HOA. 

If you're difficult to deal with or require extra handling (i.e. pays each month's rent in 2 or 3 payments) there's a $250 upcharge on what the rent increase would be normally.

I like option #2 but you might not be able to buy too many homes with just $75,000.You might be able to get into some decent properties in the $200,000 range in those cities which would require 20% down which is $40,000.If you had $25,000 ontop of the $75,000 HELOC, you might be afford the downpayment, closing costs and a small rehab budget.Best of luck!

My wife and I would like to buy a rental next year (most likely using a DSCR loan, to dodge the DTI requirement), but I'm not completely sure if that would get us stuck down the road.

The size of the data sample required for accuracy is definitely key. 

From my perspective a 6% commission has never been required.