If it's not possible ask your inspector to keep a special eye on the utilities and be prepared to take on a little more risk. 

It's not impossible to do a 1031 exchange out of a property while carrying back a note, but it's complicated enough -- if you're going to make the deal attractive to him, find out if he plans on looking at a 1031 and come prepared with information to help him navigate the hurdles that come with the seller financing. 

Deal flow is tight, but a good deal will pop up when you least expect it if you keep pounding the pavement and networking like you’re doing so just be prepared when the right deal comes along.

However, this comes with the caveat that you and your husband are prepared to cover any potential increases in mortgage payments after the renewal, especially if the new rate is significantly higher than the current 3.5%, which I ignore since I am not versed in the mortgage system in Canada (although it does sound a bit like an adjustable rate mortgage from what you described).Before making a decision, I recommend speaking with a financial advisor or a mortgage broker to explore your refinancing options and get a sense of what rates you might be looking at come June.

You can successfully and fairly easily manage an STR out of state, however for your first one I think it can be helpful for it to be within driving distance (3 hours or less) and it will simplify filing / paying for taxes and tax preparation.

Are you prepared to be a landlord? 

Also, are you prepared to do foundation repairs if necessary?

As for your down payment, I can’t personally speak to a small business loan…you would just want to ensure you include those payments in your analysis and prepare to be repaying the small business loan and other holding costs during the flip. 

She is ill prepared to efficiently deal with the $30k of additional repairs.  

I would like to know some extra strategies while they prepare to do so.