That would be the simple answer.But since you are in CA, you get special treatment and the complicated route - you might want to look into the Delaware Statutory Trust (DST) to save on the outrageous $800 annual fee. 

So what's your plan for qualifying for treatment of the CapGain forgiveness?

Hi @AP Horvath, The relinquished property and the replacement properties would have to be held for rental, investment or business use in order to qualify for 1031 Exchange treatment. 

I'm more concerned about cash-flow and finding out what it means to be an "ethical" real-estate investor.3: That makes sense, continue to put 20-25% down and BRRR/MFH with OPM. 

I have ethical issues with a lot of the wholesaling model.

I'm simply asking for feedback about this form of termite treatment.  

While I'd be happy to do business on a handshake, I have come across enough unethical buyers and sellers to know that's going to come back to bite me hard.In a case like this, and assuming he didn't want a formal listing, I'd have a contract covering my commission for 18 months for this one person or any entity working on his behalf.So from an ethical perspective, he brought you the buyer and therefore deserves to be paid. 

If you are an accredited investor you can also consider investing passively in syndicates which gives all of the benefits of investing directly yourself (cashflow, appreciation, favorable tax treatment) in return for a reasonable fee.Good luck!

All jokes aside, thank you for showing us what is possible with consistent work, dedication and great work ethics!

Do not give any special treatment.