I am curious what shape the house was when it was half-gifted to you because reading between the lines it seems like you squatted in the gift and didn't do any maintenance and don't really know anything about owning or maintaining a house.I also don't know why you want to get a rental and be a landlord when a house you got as a gift is a disaster.

Especially since it’s really an infinite year loan that’s 100% forgiven upon your death  like a $2.5M gift. 

A few additional context that may make this a bit more complicated:- ideally the 1031 exchange that I do will then add my wife to the picture with the trust that we have established (however it's easier to do)- the property was previously used as our primary property, but is now a rental property for at least 4-5 years- an alternative is the sibling is open to gift annually up to the gift limit so that we own the property outright prior to the exchange, but that will take quite a few more yearsThank you!

The more efficient solution might be to purchase from Grandma with the 25% down..you ca use the income to help qualify and obtain gift funds or other sources for the down payment.

These machines would likely cost millions of dollars, and it is unlikely they could handle the more intricate tasks of finishing the houses… think carpet, showers, stoves, air conditioners, garage doors and their openers, screened porches, and the list goes on.Just my 2 cents All the best!

If you do, you will get two gifts: free education for one of your friends and good karma for helping to grow the community.

They have offered to sell this place and gift us a portion for downpayment.

With family, you should consider just giving him a gift.

As someone else already mentioned, you cannot use gift funds for the down payment on a conventional investment property purchase.

In Gary Keller’s book, Shift, he lists 25 creative options that are most common, but barely scratch the surface:- Seller Contributions- Seller-Funded Permanent Buydown- Seller-Funded Temporary Buydown- Owner Financing- Contract For Deed- Seller Second Lease Option And Lease Purchase- Seller-Assisted Down Payment- Wraparound And Assumable Mortgage- Gift Funding- Selling And Refinancing Existing Assets- Non-Occupied Co-Borrowers- Using 401(K)- Temporary IRA Transfer- Pledged Asset Mortgage- Equity Transfer And Bridge Loan- Employer-Assisted Mortgage- Lender-Funded Buydown- Fannie Mae’s “My Community Mortgage”- Running Scenarios With Automated Underwriting Systems- Adjusting Amortization Period To Lower Payment- Adjusting Interest Rates To Cover Closing Costs- State, Province, And Local Grant Or Bond Programs- Mortgage Credit Certificate- Private LendingHe said these options barely scratch the surface.