For example, things like vacancy, no payment, rent increases, late fees are all going to affect the actual number.

Your overall cash flow will increase as well as your ROI and you will still have $1.6mm in equity.

Investors also assume that property prices rise and debt is paid down - another way of increasing overall equity over time which is not just a measure of prices. 

The absence of a utility bill increasingly overcomes the aesthetic arguments of roof vents and satellite dishes being impacted by a solar array.

https://www.har.com/content/newsroom/Highlights: Single-family home sales rose 5.3 percent year-over-year, with 5,260 units sold;Days on Market (DOM) for single-family homes decreased slightly from 67 days in February 2017 to 65 days this February;Total property sales increased 3.1 percent with 6,375 units sold;Total dollar volume climbed 4.5 percent to $1.7 billion;The single-family home median price rose 1.4 percent to $226,200, which represents a February high;The single-family home average price edged up 0.4 percent to a February high of $281,945;Single-family homes months of inventory shrank year-over-year from a 3.4-months supply to 3.2 months;Townhome/condominium sales fell 5.1 percent, with the average price up 2.0 percent to $210,887 and the median price up 4.6 percent to $170,000;Leases of single-family homes fell 11.5 percent with the average rent up 4.1 percent to $1,720;Volume of townhome/condominium leases dropped 11.5 percent with average rent up 2.2 percent to $1,515.

Can someone give me some guidance about what happens after the 1031 exchange is completed and you subsequently sell the house?  

When I say "capitalize", think of it as just increasing the book value of the inventory... it doesn't have anything to do with an investment asset as the word may make you think.You will record "cost of goods sold" when you actually sell the property.

I will second that there is a significant lack of properties that are true "deals" right now since the hurricane has increased overall demand in the retail market and is driving fierce competition.

Do you happen to know if it's possible to form an LLC in a different state, one that doesn't require the publishing of owners, such as NM, in order to increase privacy? 

Like you have mentioned, Lexington has seen increased growth consistently over the years (I believe since the 1800's and even during the financial collapse).