In the past several months he has needed to act as an intermediary between the two, think it would be more difficult if both are renting from you.I suppose the upside is you will know if things get out of control :). 

The qualified intermediary must be in place prior to the closing of the sale. 

Since the property you are looking at is $450k (and yes, you can replace debt from the old prop with out of pocket cash, you must have AT LEAST AS MUCH equity in the replacement prop, but you definitely can have more), and it sounds like you have the cash to cover that purchase without a 1031, my advice would be to:Act fast to get a Qualified Intermediary working with you, because you need one in place before anything closes.

There are a lot of investors and intermediaries on BP who are happy to offer their thoughts.

I wanted to use my funds from my SEP IRA which is currently in a qualified intermediary trust.

Meanwhile, look for solid cash flow properties in the midwest to prep for a 1031 exchangeGet yourself a Qualified Intermediary before you go to market with your SD prop1031 exchange your SD prop into a portfolio of cash flow props in the midwest.

@Dave Foster I did a reverse 1031 this year and the intermediary exchange company created an LLC.

I'm an intermediary, we've done 28 loans in the last year+, and literally every single one has been fixed rate.

Of course, always always always talk to a CPA and/or Qualified Intermediary before pulling the trigger on either option.

You have to use an intermediary.