Perhaps there is a problem with his background check or a lack of sufficient income or rental history?

I have sufficient lot sizes and room in some of the more popular neighborhoods so I don't have size issues. 

In my experience, rarely does the sales price spread give you sufficient dollars to make a quality repair. 

Once you have sufficient positive cash flow you should survive.

However, if you have good credit (and sufficient credit history) and income and all that and DU is fully approving you, then rent verification should not be required. 

I fear this is not sufficient.

As I said, there's no limit to how many 1031s you can execute, so you can potentially (and many people actually do this) continue to leapfrog from one property to the next (after holding for a sufficient period, usually 12-18 months) without paying taxes, indefinitely.

Florida actually ALLOWS the practice as long as they deem the EMD "sufficient".

If you aren't crazy leveraged, and have sufficient reserves, and are invested in an area that's growing (or at least not declining), you will either increase your profits or not even notice that anything happened.

So the downpayment needs to be sufficient to cover your expenses and the headache in an event your tenant defaults and you need to take the property back.