If you can wait out a market correction, you're in good shape.

I generally don't like to go less than $10K-$20K on a downpayment to be sure the buyer has skin in the game.I ABSOLUTELY recommend you work with a Real Estate Lawyer and/or Title company on deeds, promissory notes, deed of trust etc... to make sure everything is drawn up correctly and filed correctly.

I like to utilize these tools when I am doing "mindless activities" such as washing dishes, getting ready for work in the morning, driving around, etc...My last piece of advice is find a local REIA which is like a real estate investors club.

You could still use a 5% owner occupant loan to buy up to a 4 plex (I believe - mortgage folks correct me if I'm wrong)  with your 1031 as long as the 3 units you rent equaled the value of the property you sell.3.

In the end, the math is basically the same, and my workbook produces the same projections that J Scott's and the BP deal tool does. 

If your estimates are correct and your strategy is to keep this as a long-term hold for rental income, I don't see how it makes sense. 

We should ask Frank to correct that!

I tried to get into 2 places in the nicer parts of Neptune, went so far as to write the offer, only to find out that the listing agent didn't list the property correctly and it was a HUD home owner occupied purchase only.  

I saw a slight increase in my policy and just looking it over seeing appliance coverage and internal property coverage.. i assumed it was correct... turned out it wasnt and initially they declined my claim, but i hired a lawyer and kept track of the info like the person i talked to, date, time and such and they managed to go back and find the recording of the conversation and then accepted my claim, but they truly fought me tooth and nail on the amount.

However @Richard Balsam is correct about insurance and everything, getting the rent that is due is a great return, getting them to pay for everything else might be possible but will make everything much harder.