This is made possible by them setting up a Tenants In Common (TIC) structure.Has anyone done this before?

Your situation is surprisingly common.

I presume probate court will become part of the scenario.

Any asset you buy that provides income is an investment.Whether the home in your scenario is considered an investment or not really boils down to your goals with the property, but it also doesn't really matter.

This sounds like a nightmare scenario. 

So this would NOT met the 45% of DTI based on either of these two scenarios above.But if I take these total rents and in my stock/dividend portfolio, has anyone seen this work in the past?

In a real estate borrowing context it's most commonly used in construction and bridge debt originated by banks.  

Furthermore  once the 1031 intermediary get their cut and you also pay two sets of closing costs ( buyers now have to pay closing costs in some states ) as opposed to just one closing cost ( if not doing the 1031) it might be a “half a dozen vs 6 of the other “ scenario .Also one of the turn offs to the 1031 exchange is the interest rate will be much higher with todays rates especially since we would have to get an investment property loan which are higher than “ primary residence “ loans ..Will probably lower the rent asap ( have one more showing ) and then put it on the market .Thanks for the great advice Christian 

Out of 2,500+ investors we have as clients, only a small handful invest as an LLC.I could see the point to an entity if a group of family members or friends were pooling their money to invest in a syndication or several syndications, but outside of that scenario I don’t see the point to it.But don’t listen to us, get competent legal and accounting advice from those licensed to give you proper advice after evaluating your legal and financial situation and risk tolerance.

It was common to buy land for 10-20% of what it had been selling for just a year prior, sometimes even less.