Would this make is challenging for a non-local specialist that may not be familiar with NJ/PA tax law/rules/regs?

In lieu of the absence of these look at the 50% rule Cash Flow on page 2. 

The rules of tax sales can be quite complex and change from state to state, you need to understand the local laws to make sure you are not going to lose out just because you don't understand the rules. 

My tenants are interested in buying their rental from me but need time to improve/establish their credit as well as save up a down payment.

To the OP - if zoning doesnt allow it to be improved as a MHP then just take it out of the equation as a whole.

So, my question to you RE experts in 1031 exchange is, are there any tax strategies to implement post 180 day exchange rule expiration to avoid this mortgage boot tax??  

The question: I would like to know if there is an acceptable exception to the "cash flow is king rule".

RE is always local, but the rehab deals in my area a nearly impossible to find unless I'd lower my margin...I generally use the 70% rule. 

I see negative cash flow if you are buying but hopefully they will improve over time. 

Is there a rule of thumb for setting a reserve amount?