This is more of a commercial real estate rule of thumb and I think it is less applicable to small multifamily 2-4 unit properties for several reasons.

Initial purchase was in August and contractor committed to get the house renovated in time for us to get it into the mls by Labor Day.

Its possible underwriting might balk at a nonconforming unit because in theory it could be shut down at any time and that income could evaporate. 4.

Additionally, are there any challneges as working 40 hours job and doing Real Estates?

EDUCATE YOURSELF - yes, it will take time, but will lead to a selection that better meets your expectations & avoids potentially costly surprises!

I'm concerned that if I place an ad to find people who will work on an hourly basis (in the area of the property) that I might have a hard time finding people who can reliably respond to emergencies during off hours, but I can't afford to have someone working full time or with standard on-call rotations. 

I'm Cindy Wirth from Oceanside, CA, passionate about real estate investing for the past few years.

Hello Chris, When you find the time please reach out to me. 

I have not done a 1031 exchange, but my understanding is that often times people do that to "trade up" to a larger (or bigger) asset.

Reach out to a few and see who you like.You can also ask members of your local real estate investors association for real estate accountant recommendations.Good luck.