I have seen so many unethical sellers while doing business in past, one could write something akin to Borges's Universal History of Iniquity based on those characters. 

The cost of the new property covered the 1031 requirement of the value being equal or greater than the sale price of the joint property that was attributable to me (50%). - After closing as an individual buyer and completing all 1031 requirements (IMHO), I formed an LLC through my lawyer for the purpose of transferring the newly acquired property in there before I rented it out.

Hello, Manuel Llanas, your property has several positive attributes, such as a great location and a low mortgage rate.

However, when you sell the individual condo units, capital gains tax will be triggered on the gains attributable to those sales.Allocation of Basis: The original purchase price and any improvements made should be allocated among the individual condo units to determine the basis for each unit.Gains Calculation: When selling a unit, the gain is calculated based on the difference between the allocated basis and the sale price of that unit.Partial 1031 Exchange: You may be able to use another 1031 exchange to defer gains on the sale of individual units if you reinvest the proceeds into other like-kind properties.

Lot of foot traffic from shady characters and not the cleanest of properties.

In a modern house without any character, I think it is beneficial to have a mostly open concept for public rooms, Of course if there is room for a living room and a family room, one should be separate and more of a hangout space. 

Find out what you want to rehab into (4 bedrooms 3 bath, or a 2/2, whatever), then find comparisons in the area for those attributes, and find out their values.

The portion of your homeowner's insurance attributable to the rental unit can be deducted.Building a basement apartment can provide valuable tax deductions if you rent it out.

I don't know Rod at all, but he talks the talk as far as character, values, mindset, relationships, leverage, and one's "big why".

A way to account for the additional borrowing (or in this case effectively a cash gift towards down payment) is to attribute an interest rate to the $500k (or even an interest free loan over 30 years).