Alternatively, there is space to add a second bedroom.

With so many “alternative” qualifying programs out there, there really has to be something other than “under 2 years employed” or “doesn’t show all his income” for the buyer not to be able to obtain institutional financing, and hence be willing to spend $250k for a $200k house. 

Alternate uses of the same money).

For example they took on (a) floating-rate debt (instead of fixed rate which was more expensive but safer), (b) short-term debt (cheaper but then they ran into refinancing problems) and (c) high levels of debt (to try to juice projected returns rather than conservative levels which aren't as "exciting" to a certain type of investor).

There are far better alternatives. 

Run your deal analyzer as if you are purchasing the house now for $230 and see if it meets your investment criteria (and also compare it to an alternative investment purchase). 

There are alternate money options as well. 

Some that are going to be safer.11th Property(Beaufort, SC)List Price: $311,000Purchase Price: $292,000Financing: Cash3br/2ba, 1700 sq ft house.

As I've gotten into the stock market in a safer way in the last year (index funds, quality companies, etc.)

@Donald Howaniec another alternative to a 1031 is to invest in a syndication (or fund) where bonus depreciation is being taken on assets as they are acquired.