I recently inquired at several banks and found there is a surplus of liquidity banks are looking to lend on.

In the event that this offer is accepted by Seller and Purchaser shall fail to perform the terms of this agreement the earnest money deposit shall be forfeited as and for liquidated damages suffered by Seller.

If I have $400,000 in my pocket and no equity in my Replacement Property, I think I've liquidated the first investment, and Section 1031 has no relevance.

As my business has grown some I now keep larger liquid reserves and I use that hold back account as a fund for new property acquisition.  

After inflation you're often times getting negative returns on the 100k to keep it liquid. 

I guess tying up $150k on an investment that isn't liquid is a risk in and of itself.

Where as with my SFR portfolio, I have more options...I could more quickly liquidate to another investor and recoup my investment, I could upgrade a bit and then sell off at retail, I could lease option to my tenant.

Sounds like from your and Nate's comments I'm double counting that number in my expenses calculation.Nate, I'm pre-approved and have funds liquid so I can write a check immediately.

I have access to a little bit of "liquid funds" to use as a down payment or backing of capital.  

Strongly dissuade stopping what has worked well to give you financial stability (retirement, good debt to income, liquidity) - and the banks would probably see it the same way.2.