With capital gains taxes they would like to explore the option of a 1031 exchange.

If you don't have the experience, then you'll be unlikely to gain that loan.  

Payments that you make normally fall into one of 3 buckets100% of the payment can be factored in somewhere on the returnPartial payment can be factored somewhere on the return0% of the payment can be factored in somewhere on the returnHouse-hacking also has considerable tax implications in the event that you want to sell this property.You can potentially defer a portion or all of the gain on the investment property with 1031 exclusion.You can potentially exclude a portion or all of the gain on the personal residence with section 121 exclusion

All online 1031 calculators can calculate taxes due but don't have an option to calculate the tax due on a partial 1031 recognized gain.

First of all please check with your CPA for additional guidance, but you should be able to get a "stepped up in basis" on both properties and not have to pay any capital gains.  

Thanks @KyleMccaw We were thinking about doing a 1031 exchange but TN currently has currently the lowest capital gain tax its ever been which is15%.

I know the homes will gain equity and that would be great for my bottom line, but I'm really looking for an income generator.

I know the homes will gain equity and that would be great for my bottom line, but I'm really looking for an income generator.

When you are first starting out it's about gaining knowledge so don't get too caught up in commission rates, etc.   

Avoid Capital Gains Taxes on Real Estate": https://www.biggerpockets.com/blog/capital-gains-tax?