I'm not completely concerned with cash flow, but IMO it is important when building a Rental portfolio.

Some things that might be a concern:1) Obviously have to make sure things are all permitted first2) I don't want the room to "feel" like an addition, so flooring has to be same level/standardized with the rest of the house3) Unlike the rest of the house that has an identically-shaped 2200sqft basement underneath, this added space will not have a basement directly underneath it -- I'm not sure if this poses major cons for some reason that I'm not aware of4) Especially given the lack of basement underneath, I have to make sure that the HVAC can still somehow be piped into this room#2 and #3 are probably my biggest concerns (#1 and #4 I can find out relatively easily)Any tips/thoughts or other experience would be greatly appreciated. 

My other concern is that he is claiming this to 1-stay in the house somehow or 2- withhold rent.

The other concern is a potential market correction which if it does occur will result in me being upside down on my equity position after the 1031.

Any concerns on get rentals in this location?

I would be concerned about what it would do to my credit by having multiple credit cards all at once.  

The Agreement also states that he will be subject to the terms and conditions of the Lease Exhibit A while living in the home.I have two concerns:  1) in this type of arrangement, would I be able to evict him if he defaulted on the payments?

Hobby landlords are less concerned about profits and more concerned about having to work.For the small time operator the fear that a tenant may leave can be a frightening proposition since they are not equipped to replace that tenant efficiently and without a vacancy.

Yes, that is my biggest concern is the very poor cash flow - but with the area I'm in, I see appreciation being a large piece of the puzzle.

I understand your concern with today's market.