That's why my est mortgage payment is high.

I gave option to pay last month rent in 2 payments 10/1/16 and 11/1/16.

That person leases the house for XX.xx  payments every month.  

(not including the mortgage payment)Am I misunderstanding something?...

@Melani Sweet my question about hard money would be how would you make the payments in between when you purchased the property and when the 1031 closed?

They are probably just using the down payment to pay the realtor, and besides what difference is it to you as long as they accept your offer. 

I know the worry of having two mortgage payments but rentals are low supply right now so there is low risk that it will be vacant for long.  

It will vary depending on if its your first use or second use.Also there is a hack because if you absorb it, yes you'll end up with a higher rate temporarily but 6 months of good on time payments later you can always do a VA IRRRL down to market rate again and VA IRRRL (interest rate reduction refinance loan) have a much lower VAFF of .50% so its much easier to drop your rate.

One for the downpayment and the other for the purchase of the property whereas I pay the downpayment private money 10% and the purchase private money 7.65% interest only payments.

You would have to leave your cash & your down payment "in" the deal for 6 months.Now...consider the idea of using hard money or private money to fund the purchase and the rehab on day 1 with none of your own money down. ....so there is none of your own cash in the deal.