Many times these include underestimating Renovation Costs (Rehab Cost) especially worse if unexpected issues arise, improperly running the comps (Comparables) to determine the After Repair Value (ARV), or overlooking the (Holding Costs) that are paid monthly until the property is sold.

Some problems that can arise with homes like this especially in colder climates is the lack of winterization and the effect that the weather and time will have on the materials. 

@Michael TungHi Michael,Yes in theory a foreigner can do a 1031 exchange for US purposes, but the issue arises in the country of residence.If you are a tax resident of Canada for example while you can perform a 1031 exchange In the US it does not make sense as you would still need to report the gain on your Canadian tax return.

If possible, we do not want to exacerbate this (of course if issues arise, we aren't afraid to evict/do cash for keys, but we want to at least try to make it work first). 

Account Closed Thanks for the information, I will keep them in mind if the need arises.

I'll keep in mind putting extra $$ aside to deal if the issue should arise. 

and if there are any other issues that may arise when doing this.

You want to make sure you understand the implications of converting as well as any unforeseen consequences that may arise. 

We have also been really patient and polite to our landlord in all forms of communication, but the issue still arises that we have no hot water.

We have also been really patient and polite to our landlord in all forms of communication, but the issue still arises that we have no hot water.