Here is what I would do:I would still close on the property but send a letter to the sellers broker and the seller along the lines of below (note I would have an attorney write it and send it):It has been brought to our attention there was a $15,000 insurance claim on the property.

Based upon my research findings I might also start thinking hard about that heater.So, the seller can come after me for the loss of income as a damage since we both agreed that the tenants would vacate at the time of closing even though there is no closing now since my financing fell through. 

When you do a traditional 1031 exchange you have 45 day identification period, to provide a list of potential replacement properties and 180 days to close on a replacement.

If they sell at 220 after closing and loan paydown they make like 20k or so.

I have to ask: do you have to move to San Diego and be close to the ocean?

Who has closed a subto deal for a primary residence?

@Damon AlbersSounds like these properties are in a class c area and your manager is not doing a good job vetting themBut this is not out of ordinary for c class rentals which is why people look at cash flow and be like wow but one $5000 bill can wipe out 4-6 months of rental income and properties never make money and rarely appreciateThis is why we do not do lower class rentals as stated cash flow vs reality are typically not close

How close is the relative anyway? 

I've got a property under contractPurchase price $78K out the door (I have cash to close) Intent: build on the property which already has a functioning well, septic, and needs PGE installed Total buildout on the property utilities: $128K including the original land purchase price.

Eggs in many baskets or eggs in one basket and watch that basket closely???