I recommend buying into section 8 rental that have already did the modifications or repairs and passed the city inspection.

For our clients, we separate repairs into catergories: 1) Health & Saftey - highest priority to avoid lawsuits2) Property Preservation - don't want a $500 water leak repair to become a $5k repair later3) Government Required - for city & S8 inspections4) Marketing Negative Impact - who wants to rent a "purple" house?

These improvements included updating key interior features, enhancing curb appeal, and addressing any necessary repairs.

I feel like there's no way the renter could be expected to stay in the house while this is being repaired, but I don't know how this all gets remedied.

Initially I told the tow company that they appear to keep a 9to5 type of schedule but recently my other neighbor saw them repairing cars in my driveway during the day. 

I have all this cash in hand and I feel IRS is going to take a big chunk from it.I just did many repairs/improvements on the other property as write offs to help somewhat when I file next year.

Once it's complete you take title and complete your exchange.Can I put about 30% down on the new investment property using the 1031 exchange then take out a heloc loan of 80% LTV and use that money to make repairs?

Looks serious to me, but repairable.

I occasionally get someone that says, "I know this one guy..." but they can't provide actual details and it's probably just a rumor.Almost all legal disputes are over security deposits and very small amounts.Large suits involve injuries, which are only a risk if the landlord is negligent (e.g. fails to repair a broken step and the tenant falls).Even if the landlord is guilty, the suit will most likely be settled out of court and covered by insurance.Even if it goes to court, insurance will cover the costs.The odds of a landlord losing a lawsuit for more money than the average insurance policy will pay are about the same as winning the lottery or being struck by lightning twice.

It costs the same when I need a plumber to come out to repair my leaking sink.