As long as that portion costs more than $100k exchange.

@Benjamin Aaker is on the money.Your income probably prevents you from using RE to offset your W2 income but you can still use deductions and depreciation to offset rental income.If you are looking to REI to reduce your taxable income on your W2 earnings REI won’t help much at all.One needs to be precise when discussing tax law.

@Brad L Doran greatly appreciate the timely response and email exchange.

Would that $150k come out of the $500k proceeds involved in the exchange?  

And for purposes of the 1031 exchange the net sales price would also be allocatedo 70/30.  

According to @Jay Hinrichs, the back yard might be a separate S corporation as developer for ordinary taxable gains and the front part a 1031 exchange for capital gains. 

Hi, I'm Jordan and I'm eager to broaden my understanding of real estate investing by hearing success stories, exploring current deals, addressing questions, and exchanging investment insights.

The most common I know of for people low on cash is partnering with someone who will finance most, if not all, of the deal in exchange for them taking care of most, if not all, of acquisition and management.

The partial exchange already addressed. 

Also, any property investor would just 1031 exchange the property.