My wife, son and I then moved, after 2 years of LPs, to be General Partners in large MF syndication mastermind so now we are in 13 deals, 3,500+ units, as co-GPs focused on Key Principal, At Risk Capital (EMD) and Capital Raising roles.   

Those 12 months aren’t paid for by the government but rather added to the loan either directly to the principal or as a second separate balance (lien).

Since my house is paid off I would put the extra capital i was paying for a mortgage towards the principal of the 1st property I purchase to pay it down quicker.

(i.e. taxes & insurance escrow, principal, interest ?)

My mortgage is $1530 a month includes principal, interest insurance, taxes and long term rent is $2400 a month.

You won't need to deal with a 1031 exchange and can still have the benefits of depreciation and seeing your loan principal paid down. 

Outside of principal, interests, insurance, down payment, and closing cost what other expenses should I plan to see when purchasing the house?

(In short, is paying $400/month for an asset with principal being paid down for 5 years a good investment?)

Where the confusion exists is that you can not deduct it as a a mortgage expense of your principal residence (personal itemized deduction).

With traditional Airbnb investing where you purchase the property and househack or just airbnb out the whole house/unit, you OWN an ASSET that is appreciating and therefore building equity, capitalizing on major tax incentives, paying down your principal, etc.and you have several exit strategies .. you can sell, refinance, Airbnb, long-term rent, mid-term rent, flip, BRRR, you name it.