I may be paying a little more than I generally would on a rental house but if they're carrying the loan for me (with zero down as well) then I'm avoiding the hassle of the bank initially. 

You can take a little more time on the rehab at 0% interest (though you’ll have no revenue to offset the principal payments until it’s rented so that’s some carrying costs).

The interest carry will eat your profits fast especially if you struggle to get the project done and sold quickly.The best way to get started in REI is by wholesaling.

We negotiated a seller carried loan for 1 year term.

In order to go from 2 units to 12 you'll likely need a fair amount of leverage, which may take you out of your comfort zone, carrying the student debt plus hundreds of thousands more in mortgages.I think the plan you've laid out sounds solid, picking up another property and paying down debt. 

Have him carry back financing if possible. 

For example vacancies can be higher in lower rank areas and can I go one or two months without any income while also servicing the properties carry costs. 

Make sure tenant is carrying insurance on their possessions.

So,If I understand the mechanics of a 1031 correctly, your basis in the property (due to the carry forward basis in the 1031) is Lower than $170k.You are Liable for depreciation recapture while it was a rental, whether or not you declared the depreciation.Assuming the above is true, you will have taxes due.You definitely pay income tax on any interest received.For the Principal you receive (including the down payment) it will be allocated into three pro data portions of:Return of basis/costs-no taxCap Gain- cap gain taxDepreciation Recapture- ordinary income tax at up to 25%@Ashish Acharya When later converting an investment property, acquired by a 1031, into a primary residence, then selling, give you a partial, Qualified Use pro rata calculation for the 121 exclusion like when you do the same thing with a non 1031 acquired property? 

In my market, ever city, it is a class one misdemeanor, which carry’s a fine of up to $25,000 and a year in jail.