Seems like you're in a good spot with lots of options.

I suppose something more turn-key could be a good option, but haven't come across many viable options there yet.Anyways, we still have a lot more to learn and still need to familiarize ourselves with the area/market, but just wanted to pop in to say hi! 

Don't be so quick to indebt your paid off townhome until your learn creative financing and review all your options.

**Cash-Out Refinance/HELOC:** Another option to avoid paying capital gains taxes is to not sell the house at all.

@Jerry Chilimidos,Here is a list of lenders who specialize in lending to IRAs and 401Ks:https://www.biggerpockets.com/member-blogs/2810/50272-list-o...I don't know where your rentals are located and how they are performing but selling might be an option vs doing cash-out refi.I would certainly consider option C.

I really like Lease to own option to get into deals without having to take on massive debt.

Quote from @Patricia Steiner: There are several lenders who offer low/no closing cost options for first time homebuyers.

Rates may still be high, but sometimes they’re more flexible with repayment options than a mortgage refi.Family Loan Structure: Since you have an existing interest-free loan from family, you could talk to them about restructuring or even adding onto it, if they’re open to it.

Search the BP for ADU appraisals to encounter numerous examples.

So all of the gain and depreciation recapture are initially still tax deferred.However, like Joe said, the down side is later when sold  you lose the 1031 option. the client will pay tax on all gain and depreciation recaptured from before the 1031 also.