@Tea MarieInteresting question because the pre-tax 401k contributions reduce your annual taxable income. 

I understand that a larger initial down payment would reduce the monthly mortgage costs, but that just means I forgo more cash upfront which still factors into cash flow.

Asbestos siding to reduce fires and damage and lead paint to be longer lasting:-(

If you find a place that reduces that significantly even with you coming out of pocket a few hundred a month, then it's worth it because you will still be saving money each year.  

.- other than reducing seller's taxable income, what are other reasons why this option might be attractive.- what kind of rates have you negotiated.Share your story!

We would be looking at quite an investment however with the purchase of the land, possibly installing a bulk head, sewer, power, cement, pilings, deck, and a few improvements like fixing sheetrock, adding shutters, etc.So in summary, we are considering moving our current home to a higher value piece of land and then selling.  

Resale of the home will be extremely difficult and reduce the property value by tens of thousands. 

Tenant paid water would reduce your overhead costs and it seems like it would fit right into the overall cost profile for the tenants if their rent is so far under market.Jim.

My housing cost, while I live there, will be reduced once I do this.

I have about 8-9 feet of ceiling height and I'm not sure if I can put a barrier 6inches to a foot to reduce the noise transfer.