The IRS treats the LLC as if it doesn't exist.

[Sure, each property is treated on its own merits].Btw, 1% is way too little allowance for cap ex, and maintenance, and management! 

Do the numbers IN WRITING like a business if you intend to treat it like one, even if it's house hacking and not a 100% rental. 

Some sellers can grow to so much more so always treat them right!

Most rent to own situations forgo the 1031 route and treat it as an installment sale. 

Just touring the units will give you a good idea on how they treat the property and also gives you a chance to ask them if they like staying there or if there are any issues you should be aware of.

They're already getting behind on a below-market rate which means there's a high likelihood they are treating the property as less than it is worth.Get rid of them.

In order to keep your investment intent intact you would want to treat it as arms length and legal as possible. 

I have also told acquaintances who are looking for housing for a family member, that federal Fair Housing requires that I treat everyone the same in terms of application, screening and qualifications. 

It sounds like this project should be treated like a BRRR.