Secondly, if you do approach these people and happen to find a motivated seller, and wholesaling is a problem, is transactional funding necessary?

So they would expect to take a transaction fee or marketing fee or whatever they take out for every rental transaction.  

Not uncommon when the sale price is more than double a recent transaction.  

If you negotiate a good enough deal that pays you then complete the transaction with the investor to buy the house you have under contract.

Once you have completed 2 real estate transactions successfully, I would apply for a acquisition and rehab line of credit.  

Additional info:primary 1031 exchange rules and requirements include: 1) same taxpayer: the taxpayer who sells is the taxpayer who buys, 2) property identification within 45 calendar days post closing of the first property, 3) purchase of the replacement property within 180 calendar days, 4) trading up: the price of the replacement property is equal to or greater than the old or relinquished property, 5) hold time supports the intent to hold for investment, and 6) related party transaction regulations. 

In pure accounting practice, ONE journal entry is used for the transaction (call it move-out) regardless of how many line items are required (say damages, past-due & deposit refunds). 

Long-term I'd hope to grow a buy-and-hold portfolio, but I'm very focused on this first purchase for right now.Since I work downtown, don't own a car (and don't want to), and spend most of my time in Central LA, I'm looking really closely at areas around downtown: lower-cost areas with decently affordable 2-4 unit buildings (in the $400,000 to $800,000 range) like Pico-Union, areas around USC, and even up around Hollywood/Koreatown when the rare good deal shows up there.I've been looking around on Redfin a bunch, but have seen little to nothing that satisfies Josh and Brandon's "Two Percent Rule" (or even 1% rule).

Not to mention the taxes on condos are much lower than single-family homes especially in the Chicago area where I am at.

I also have access to my office agent manager, for brainstorming.Plus, having a powerful brand (like Remax) ... or any othet stable company makes little difference in normal transaction real estate... but it is huge in PM, where many PM are not even licensed.