Is buying at a 5% cap rate today conservative, or is it an 8% cap rate?  

I have seen some decent lots sizes as well to add in an ADU or Carriage Home/mother in law suite. 

Usually wholesaling works best as a side venture while buy/hold is the main focus.

Yes, you can buy a STVR in your retirement plan.

With this being said I am not a licensed tax professional and your question is probably best suited for an accountant. 

Could you buy another house hack instead? 

If you are confident you can re-rent it within a certain time frame, you might offer to let her buy out of her lease.

This gives you the financial resources to buy your next property or two.  

For buying a second house, should I declare high taxes again or save for a 20% down payment to qualify for a loan based on my active income, without needing tax returns?

If I sell a single family house for $1 million which has a mortgage of $100k, can I do the following: I buy a single family house property using 1031 exchange for $1 million and get a mortgage of $700k .