@Matt McCurdy We have lots of clients that utilize this strategy.

My best guess is their failure rate is more than 98%.The truth is not as “convenient”.

I am looking to purchase real estate for both investment purpose as well as to offset as much tax liability as possible. 

How have you handled this situation? 

Can anyone on this thread recommend a DSCR lender who allows Padsplits?

This would likely kill any cash flow for a first duplex purchase, but allow you to purchase a second one much more quickly.We have seen strong appreciation and rent growth through this market.

We do a post-closing appraisal on 5+ unit deals, so we can help with a bridge loan for the acquisition and close within a week or two.

I've seen a lot of people try this, and they rarely use the home. 

This 1031 Exchange Calculator can help you model out the taxable proceeds based on various situations. 

@Frankie Lotrec if you have an existing loan on the property and you plan to legally convert from a 4 unit to 5 unit , you should check the loan documents because you’d essentially be converting it to a commercial property, since 5+ units is considered commercial and subject to different appraisal approaches and so it would rule out the property being considered for purchasers utilizing residential financing.