3 days before closing we got the appraisal back and the appraiser had discovered from the satellite image on the GIS that the lot line was off, half of our parking lot technically belonged to the neighbor.

Do I bit the bullet and pay some negative cash flow for a few months (potentially... could be longer) or do I attempt a Refi? 

@Brian Knotts The lease must be long term (30+ years) to qualify but also must be purchased with the intent to hold, as any other 1031 Exchange property.

Most agents belong to one or the other, but there are some agents that belong to both.

Lots of local investors belong

With that said I've seen that hard money loans generally amortize over a 30 year period with a balloon payment due at the end of 1 year (could be as little as 3-6 months, could be longer).For the refi, you'll want to talk to your lender(s) to see how much of the ARV you can pull out. 

The home had belonged to the man's aunt, and they were supposedly paying $500/month rent to her.

She also points out another structure in the back of the property which at first I thought was the neighbor’s house, also belongs to the seller.

Hi, @Ellie Johnson, this kind of post belongs in the Marketplace forums.

Since I don't have any personal belongings in the rental, I wanted to keep that one at $10K (enough to cover the appliances I own).I used BBB and this article (from cleasurance.com) to guide me.