I just had to sell my mothers house in Sanford (right next to Michigan).   

She wanted all the names of her grandkids because she was paying all their iPhone bills etc & she wanted her mothers name on the mailbox as well.

However, what I can comment on is the perspective of a young wife and mother.

The problem is, he will owe my mother money upon the sale of the house (divorce settlement).

Option 1:  Spend $50,000 on a conversion from a huge basement garage to a mother-in-law unit that would increase your rent by $500 per month on an existing rental.Option 2:  Spend $50,000 on a down payment on your next deal that should cashflow $200 per month after expenses, in addition to the loan paydown, appreciation, and tax benefits.

Just some speculation here but if you found a two unit property - duplex or two houses on one lot or a house with a detachable mother in law suite or something like that you might be able to purchase that property and then use it for both primary and investment as long as the valuations work.In the 1031 you need to purchase at least as much investment property as you sell. 

Was my Mothers house on a family compound and did not want to go outside of family.

One of the couples living there had their mother sign the original lease as the tenant and  next to her name was the couples first names,  I guess a form of co-signer.

And then there's color for some properties: I used to have a place I called "The Devil's Mother" because in Greek, the equivalent expression for "the middle of nowhere" is "where the devil's mother lives."

Me and my mother are rookie investors and want to be educated on the business.