Any advice on how to proceed would be helpful.

If you want to defer all tax you must purchase at least as much as your net sale and use all of the proceeds. 

We are closing on our second rental property next week and I was looking for some advice when it comes to a Landlord Insurance Policy. 

Or the fact that if you do nothing that you can pretty much write down now how the rest of your life will proceed?

It could be it's one of a small percentage of co-ops that does allow investors and there are too many units rented, or the sponsor still owns too many units, or it could be the reserves are too low, or not enough insurance, or a lawsuit, etc.

Take for example the following:Rental Property that is for sale near where I live:$80,000 property that doesn't need any repairs (essentially turn-key that I will self-manage) - $900 rent $16,000 down with $2,000 closing costs - Total All-In: $18,000Assuming 5% vacancy, $1,000 in taxes, $800 for insurance, 5% for maintenance, and a buffer of $200 a month, I would cash flow roughly $3,300 a year.https://www.calculator.net/rental-property-calcula...I've been around this forum to know that people will say things like 'well your vacancy/taxes/capex is way too low.'

ok so NO I DO NOT think you should consider buying this home.... first of all i think your numbers are off, insurance on $500K home is way more than $50 a month...also you will need 20% ($90,000) for down payment if purchase price is 450,000......then you also need to consider other expenses like vacancy, repairs, property management (even if you self manage)..... as your first deal this is way too much risk for negative cash flow and the hopes of appreciation........if its still sitting on the market, then its over priced....... an appreciation play is not a smart first investment IMO

The drywall and carpet needs to be replaced (at a minimum).We were carrying force-placed insurance.

If you do a 1031 exchange the requirements to defer all tax are to purchase at least as much as your net sale (for the example say it's $1 mil) and to use all of the proceeds (this includes cash and cash equivalents like the $100K note).  1.

@Garrett Olsen before you proceed I HIGHLY recommend that you check zoning on this first.