Much of this analysis is based on the size of the land, how much it will cost to do the horizontal development, and then estimate the cost of the vertical build and ultimate value (aka "sale price")

And keep in mind that the rate on the 2nd lien will likely be 10-12% so depending on the cash flow it might not actually yield that much cash to you at closingMore importantly, it's just more debt so ultimately it sounds like you need an income-producing event to actually improve your situation and avoid some of the consequences that you mentioned

Your 1031 will ultimately be only as good as the individuals directly assigned to your exchange.  

Ultimately, you should choose the option that best supports your financial well-being while striving to keep the relationship amicable.

Looking to buy duplex to live in and ultimately renovate if the numbers make sense.

@James Carlson You probably already know my thoughts on STRs vis a vis 'affordable housing' :-)But this is going to play out as it will, and ultimately even Gov't intervention/restriction will fall to the power of the free market, so we'll see how it goes.I wish the property owners and entrepreneurs well, although some of them will learn that 'elections have consequences' as 44 so famously said.

I purchased a duplex in Saginaw from them in late 2023 and should have seen the red flags from the start.An early red flag was when my contact Katee was doing a video walk-through of the property that I ultimately purchased.

What Don says captures most deals that ultimately looked to have been undervalued by the market, or current owners, but really were not. 

Personal Timing.For many landlords contemplating a sale, the timing ultimately comes down to personal choice.

@Catherine Javier If you find the property is more of a liability to you and ultimately decide to sell, the 1031 exchange would probably be the best way to take advantage of using the tax and find something with a greater growth potential.