@Sean AppleYour 1099 income may allow you to qualify for a Solo 401(k).  

I don't have any direct referrals in Buffalo however, make sure you choose and EA or CPA who is qualified.You definitely need someone qualified, does not have to be a CPA, could be an Enrolled Agent or an attorney.

If a really qualified tenant comes along, willing to make an exception with a larger security deposit. 

You would still have the two requirements of 1.purchasing at least as much as you sell (the net sale or roughly 700K) 2. use all of the proceeds in the next purchase (roughly 175K).If you keep that property as  a rental for no more than three years after living in it for two years you would be able to sell it and still qualify for the primary residence tax free exclusion even though it is a rental at the time of sale.  

There are some instances that you pick up a good tenant that doesn't care about  the area but for the most part qualifying the tenant is a problem.

A refinance is easier to qualify than a purchase and his barrier to refinance would title seasoning.  

All markets are different of course, but in my opinion you should be priced so that you can choose between a number of qualified applicants

Here are my questions: 1.If I use the conventional loan, how easy would I be qualified for the 5% DP and would I be able to qualify for rehab loan as well?

Hey, South Florida wholesaler here, Yes, i think you should just pass on the deal or refer her to someone who does Short Sales assuming she qualifies for that, but they definitely no room to wholesale.Good Luck! 

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