Next year, we would like to sell one of our smaller properties (a 4-plex) and do a 1031 exchange to defer capital gains taxes.

I've used the IRS capital gains exclusion to sell at PCS time when the appreciation provided me more future opportunities than trying to make the rental math work.

@Michael Lee Those are some topics that we've covered (or recorded) at least, but I'll keep capital in mind.

I'm looking to start investing into buy and hold real estate by next year June ( once I raise enough capital).

Regardless of what the service member or chain of command says, it's probably best to cut your losses, because it's bound to happen again. 

The cities like this around me tend to be lacking in infrastructure and internet/tech upgrades as they have been mostly left behind with the loss of tax revenues in recent decades.  

Also, if you're married the capital gains exclusion is $500,000You can also add to it the cost of any work/rehab you performed on the home that improved or extended the life of the house (known as the adjusted cost basis). 

Take the loss now on the car and home, use anything you get to pay down your debts, use public school and move to a rental temporarily before it all comes crashing down.

@Thadeous LarkinIMO it makes more sense to have you capital/financing lined up first, then you find the best opportunity you can find asap that meets your minimum criteria. 

I’m wondering if I should do some flips to build up the capital to do it.