My profile is a 700-credit score, $200k W-2 salary and $5,500 in monthly rental income and limited cash. 

The owner decided to sell the property because it was tough to turn a profit there due to the high tax burden imposed by the city.

His solo income needs to meet your requirements.

We have 2 years of reported rental income on tax returns for both properties.

I would like to sell the property to the restaurant operator and they are willing to buy. i want to hold the paper on it to get the interest and what I'm hoping for is deferring the capital gains taxes until the balloon payment would be due in 5 years.

If you decide not to utilize a 1031 and pay 30% taxes each time, after 10 transactions you’ll be left with a little bit over $2,000,000.

I am not house hacking.This means that’s I will get less favorable rates AND will be covering a HELOC + second mortgage with the rental income, which seems difficult.

I haven't seen financials but they've stated their net income is 30% (spec) and 20-25% (full custom), shovel to keys in 8-9 months.I'd like to help them execute an outbound S&M strategy but I'm new to this side of the RE world (I was a mortgage lender in a previous life and have some familiarity) and I'm trying to learn more about it.

That generally means going where housing is still relatively cheap, holding costs such as taxes and insurance are relatively cheap, and there is a lot of upward pressure on the housing market. 

We support a lot of VA investors with multi family acquisitions has to be a primary residence, (live in one and rent the others) and can utilize the income to qualify.