There's a good chance they'll still be there 5 years from now.

The very very little deals that come up on the MLS last a few hours, so if you don't jump on it ASAP there's very little chance you get them.

House #1 taxes/year roughly $3kHouse #2 taxes/year roughly $1.5kHouse #1 has a nicer neighborhood, better tenant pool potential, and higher rent potential to go along with a higher chance of appreciation. 

If there's something else pulling you to another area that's fine, but don't leave just because of tenant laws hahah.A lot of beginning investors read some horror story post or hear that California isn't as landlord friendly as other states and think that means every tenant will be the renter from hell who gives them tons of problems and constant headaches.But, you or someone you know is a renter, and you probably wouldn't consider them to be a bad person or a bad tenant... and there are plenty of great tenants out there.And don't forget there is a lot you can do to mitigate the chances of troublesome tenants.

With the property being an investment, what are the chances of getting a 5% down loan?

If it is too much of a loss, check the ID rules (you can check my blog on here if you're not familiar) and ID as many properties as you can within those limitations so you still have a chance to go check them out and worst case, you buy one and use some of your money to defer tax and take boot on the rest, or worst case, none are good deals, you lose the 1031, but better to at least ID a bunch and give it a shot.

If there's not, then chances are that you don't have any higher up (there are exceptions, like someone picking up some used wooden furniture with termites and bringing them into their apartment, but it's not so often)What's the roof like?

Why take the chance you could inadvertently offend a seller who may otherwise provide you with your next deal?

Someone bringing cash to the table doesn't have to get all their ducks in a row and get through all the lender requirements - which can run into snags.Because of the increased chance of closing, and reduced time required to close, many sellers will take a lower offer price if it is all cash.

I only happened by chance to google it because in this years 1099 email they no longer mentioned an electronic filing deadline.