The only time you should sell is when you know the money can be invested in something that will produce a much better return or when you need to move the money to bring you closer to your personal goals.

Properties 3 and 4 especially are killing you with your equity producing very little. 

I own to business that produces almost 7 figures in sales so I feel like I got some tools in hand to take this risk

The deal has produced 1 single distribution in that time and now they have both stopped updating the LP's on the deal and have not had an updates this year.

In addition, the 1031 like-kind exchange allows investors to defer taxes when they reinvest the proceeds from the sale of an investment property into another investment property.Plus the withholding 15% tax is refundable once a tax report is produced and the capital gains are submitted to the IRS.

I know nothing about the area, but that's a tiny square footage for a 3 bedroom.

While it's not a requirement that the property produces positive cash flows at move in since we're primarily looking to build equity and reduce total expenses, when we do decide to move out from the duplex positive cash flows would be a requirement.

It seems a more truthful approach is to help them sell their property and avoid the credit hit a foreclosure will produce since you are trying to buy the property (to flip or rent) rather than help them stay in their home.

Obviously, from this thread, I should be offering to pay the state 10-20% of what they ask me, reasoning that no one else will buy them and that I have a reasonable plan to get them actively producing taxes again.  

I began banking with the local branch of a community bank that had a tiny office in my town.