Hello,So I am a little curious about 1031 exchanges with respect to "step up in cost basis due to death".

Security deposit amountYou can find plenty of examples by searching for "tenant estoppel certificate doc" or exchanging "doc" with "pdf" for more options.Here is an example and explanation: Sample EstoppelSome have a lot of legal jargon but this document does not need to be so detailed.

My question is would it be best to sell all 3 single family homes, place funds in a escrow account to 1031 exchange and then invest in a 10 or more multifamily property?

@Brian Ovalle, You can combine 1031 exchanges to purchase larger properties. 

It's not possible to do a 1031 exchange retroactively. 

I say this to say my contractor, who we know and love, is interested in renting the basement in exchange for upgrading the basement that way I can rent the basement and upper level to get more cash flow.

While considering doing a 1031 exchange into a Delaware Statutory Trust (DST), I read that upfront costs for a DST can range from 10% to 18% of the invested equity.

Seller financing does not (in general) work well with 1031 exchanges. 

You can sell that property as the trust and buy as yourself or as a "disregarded LLC"(an LLC that you are the only member of and that also does not file it's own tax return.In a 1031 exchange, the taxpayer for the old property must be the tax payer for the new property. 

They can also use 1031 exchange to defer taxes.I am not saying we should not consider tax when we do investment.