What you propose is different but in your original post this was not clear.with the additional info, I have seen similar comped with quads.  

The calculation involves:Selling Price: $1,075,000Original Purchase Price: $355,000Depreciation Recapture: $105,300 (taxed at 25%)Capital Gains: Sale price minus original cost, minus depreciation, minus selling costs (~15-20% federal capital gains rate for their income bracket).State Taxes: Since the property is in California, state capital gains taxes will also apply.Given the multiple layers, I’d highly recommend your parents work with both a CPA experienced in real estate and a qualified intermediary for the 1031 if they choose that route.If you need recommendations for professionals in Illinois or California, feel free to ask!

Originally posted by @Greg Scott:There was someone on this forum that was trying to use crypto for his downpayment. 

I am originally from PA and still have family there. 

Foreclosure sale could sell at same price as original purchase, but with accrued interest and fees, all LP equity gone.At the end of the day, all LPs loses boil down to an issue with cash flow available and/or a decline in overall values.  

If you used a loan to rehab your property and find yourself in a difficult position, doing a straight refi (just paying off the old mortgage) will be easier than trying to pay off the original loan and take additional cash out.

It is not uncommon - main reason we see right now is over inflated original ARVs and now borrowers cannot sell and pay off the lender. 

Cameras originally were 1K and now are 4K.  

I'm based in Tampa and am happy to connect.I also have family in Chatanoogo and originally from AL, so I can help when it comes to those markets.

You paid 1% origination, closing, legal etc, and 4.5% interest.