Doing my first flip in South Florida and my lender requires me carry insurance.....bind a policy before going to closing.

You're in for $100K + carry costs, which should be a couple of weeks worth of homeowners insurance, taxes and utilities.  

When conducting a 1031 exchange, you carry the basis.

I pick it up and carry it like a bat, then proceed through the house. 

If you can afford to carry the expenses prepare yourself for 2 to 3 months of no rents while you renovate and wait for a new tenant which is why I’d maybe do one apartment at a time.

It also carries a declining 5 year, 5% pre-payment penalty - Is this customary?

Although this carries risk, it is an option.

That is, they won't do any carry backs or owner financing.

Credit score mid 700, above 740.Current DTI is around 43%, credit cards utilized paid off in full monthly and I carry a LOC which I was planning to pay out but have access to when this deal popped onto my radar.

Can this be carried over to increase the losses of a future year?