My question is this: since my existing siding is, in my opinion, perfectly fine and intact, am I required to use the siding proceeds on installing new siding??

That seems like a perfectly reasonable plan to me.

So no extra money to "prop up" these sinking properties and I did not get any bailout from the government either.Our house hold income from our jobs is a little under 6 figures a year and my credit score was near perfect!

It seems relatively easy to get financing for owner occupied even without perfect credit.

That would work perfectly if my partner is not on board to do thi. 

Also the other main reason is that no matter what the cap rate they set you can always put it higher or lower multiple .10%'s and sell it no problem, no one is that perfect in there market analyzation etc to pick the perfect bottom number.

No one expects perfection.

You might be waiting for a long time before all the stars align to make something perfect with low prices, low interest rates, path of progress, etc etc.

This can aid your 1031 because you can negotiate your sale contract with them with a closing that could be delayed until you find your perfect replacement property for the 1031.  

My wife and I have located a property we think is perfect to flip.