Challenges?

Also, in a 1031 the seller cannot take possession of the funds so you giving him the downpayment to do repairs would be challenging.

The dangers of mold are dramatically exaggerated, and sometimes completely false.Get a professional company that handles mold remediation.

Challenges?

Worst case is hard to predict of course but I guess you end up losing the place or paying them a lot of money as in cash for keys.How would you handle maintenance?

If a tenant wants to break a lease, there should always be something stating how this is handled in your lease agreement.

They handle all of the day to day management.

This is how I handled.

Challenges?

Selling now avoids capital gains tax and lets you reinvest into a new primary home and a solid rental property, which feels like the safer play given the cash flow challenges and ARM timeline.