The mortgage rate I have is 4.625% (30yr Fixed) My issue is that now I have to bring almost $8K more to the table upfront to then overpay for a property by $10K. 

It sounds like you are possibly contorting your investing strategy and pace to match the deal that is on the table rather than negotiating the deal to fit your needs.

Either hey thank to do the work or put some amount I escrow at the closing table.

A high debt service coverage ration - Other way of saying this is how much can occupancy drop and you still pay the mortgage.Syndication is a great way to get into a deal out of state that will have the size to meet requirement 1 and if your sponsor is good they will setup the deal to meet 2 and 3.For example, we know that occupancy across our portfolio can drop 25% and we can still pay our mortgages.

If the mortgage is $400 and you're charging $500 and area rents go for $1000 you are leaving serious money on the table.

After talking to my lender @John Capehart , he did a really good job estimating my closing costs of 14k so I just offered 14k above what the sellers were looking to net to have my closing cost included in the purchase so I could bring less to the table.

The goal is to find Micro-markets where potential profit and/or CF of similar properties (same size) are found in groups and where they define what the entry cost must be to make that profit or CF.All of the areas you mentioned, including Texas and California, and more, have that potential. 

That might determine what asset class within commercial real estate, deal size, and location you pursue. 

I do understand size plays a part in this so let's say a house is 1500sf.

I think it really depends on the size of the deal and if deferring those taxes is worth the cost and potential stress of a 1031 exchange.