There may be something called a "Due On Sale" clause.Check and see if all tax parcels are included in one mortgage or if they have separate mortgages.You have to have him spell out what he considers to be a "partial seller financing".

I would also share pros and cons of paying taxes on the windfall versus owner carry.

Is your DSCR ratio greater than 1-meaning are you cash flowing (according to the lender's criteria of mortgage, property taxes and insurance (and HOA) if applicable).

I've spent aproximatly 61.5K on expenses over the years, Interest, Property Tax, Isurance, HOA and various repairs and upgrades.

From tax stand point I would think you can separate from primary and be okay with IRS being that IRS will not be local code enforcement.  

We owe $154k on the property and the interest rate is 4.25%, the monthly mortgage is $1050 with taxes and insurance.

You mentioned gross rents of $3400 per month and Principle/Interest/Tax/Insurance of $2500 per month. 

For several reasons (property taxes, politics), I would prefer to begin real estate investing somewhere other than locally. 

@Brice Alef-Torrisi putting each property in its own LLC is usually overkill.Getting a bank account for each LLC is typically something you need to do to avoid "piercing of the LLC corporate veil" (actually depends on tax selection you made for LLC), but is also overkill.You haven't indicated how you are holding the deed for the latest property.If in your name or same LLC, you don't need a separate bank account.If in separate LLC, you can create a Master LLC, have each property LLC hire the Master LLC to manage their affairs, and just get a bank account for Master LLC.This is an opinion, not advice, so lookup CPA Frank Alcini in Troy for expert advice.

No management costs as it would be self managed, and estimated property taxes by the average of the past few years.