this will just set you back.i don't know what time you have available to dedicate to RE - if you are able, you could try to build a team and explore a market within a couple hours of you with a lower price point. 

Since 1031 is tax deferral, I assume the gain is calculated with the likely substantially lower basis from the pre 1031 property acquisition + additional cost over the years.And yes, recapture all depreciation ( on both prop before and after 1031) make sense.

Hello  @Thomas Sheehan,If your goal is to invest in an apartment where you don't have to concern yourself with maintenance and cap Ex, this deal (or perhaps another with similar rents and lower price) could make sense.The downside to deals like this is that your rents could eventually hit a ceiling as newer apartments (some with more amenities) become available.

However, as you mentioned, the lender is referring to Fannie Mae guidelines that say PMI can't be removed until after a two-year seasoning period, even if the renovations themselves have lowered the LTV.Fannie Mae's Policy on PMI Removal: Generally, Fannie Mae guidelines allow for PMI removal if the LTV drops to 80% or below and the homeowner requests it after the loan has seasoned (usually 2 years).

And you'll likely want to consider more fringe & cheaper areas for lower prices & better cash flow.I bought a 3-unit building in November last year when rates were 8% using a renovation loan (5% down), made cosmetic renovations to the units, and then we got way stronger rents than expected.

I do suggest putting the asset in the app ASAP to lower the audit risk.You can meet Substantially all participation tests (test no 2).

I had to do an elaborate french drain system with multiple pumps as the lower level units would get water with hard rains. 

Plus, given where rates are right now, I genuinely believe we're at or near a local peak.I expect rates will head lower soon, maybe revisiting 6% in the coming months.

It would lift the value of all the leased land cabins and lower the value of all owned land cabins.  

Living in one unit and renting out the other helps you scale quickly because you need a lower down payment for a primary residence.