I’m now contemplating doing a mixed property.

Positioning is a key part of all this too - the lender or financier may be in first lien or 2nd lien position or they may have other arrangements with the borrower. 

I think the root cause of the stress over the repair is that I don't trust tenants telling the truth given he lied about a long term lease and actually only looked for a flexible arrangement until he found a house to buy.

This is basically what you were contemplating.

I also recommend treating this loan with your stepdad as a true business arrangement, should you choose to move forward.

I am contemplating the following options below.

Either the lender blesses the arrangement or they don't.

If investing and residing in a small multi-family in either of these markets appeals to you BUTyou still can't get all the down payment or other money together(or you'd like to spread the responsibility and risk with a partner with different expertise),we should talk.I'll be in Phoenix in August and Vegas in October (and again late January-early Feb.) and am open to exploring such arrangements.

Your contemplation of a 1031 for your next move is exactly what you want to do if you're wanting to maximize equity use and balance the debt in your portfolio. 

Once the list is mostly complete, start arranging them in the order they will occur in the life of a lease (marketing, application screening, collecting deposit, signing lease, moving in, collecting rent, maintenance, etc.)