Check the major components, like roof, siding, windows, driveway, HVAC, electircal for good condition - cosmetic upgrades (paint, flooring, even kitchen cabinets) are cheaper than those big hitters!

I've read up quite a bit, and have lots of business experience to boot. 

Maybe an a/c is slightly more expensive if you have to cool a larger area and of course flooring and roofs are tied to the size of the house, but Capex wouldn’t be 4x as expensive in the second house, right?

Same with asphalt roofs, versus tile roofs, versus condos.  

I believe they may limit it to 3 or 4 unrelated people under one roof which I think is a state law but I would call the city zoning office to confirm.

If this is the case then the amount of those improvements will end up being taxed as boot in your exchange. 

I know a lot of investors who are selling all of their properties that are 15+ years old; for fear of upcoming repairs (roofs, A/C & boiler).

The email stated that the underwriter has assigned an action for me which read as follows: "The shed is in poor condition and needs the following repairs: rotten soffit and fascia, roof replaced and trees at the back cut down to prevent further damage."

It is exactly for those reasons that my tenants will have a roof over their head one year from now, in a building that I still own.

That leaves no money for roof, appliances, hot water heater, hvac,bath and kitchen remodel, etc.