Starting with a small multifamily property is a fantastic idea—it gives you a chance to live in one unit while renting out the others, which can help offset your mortgage and build equity faster.

The real issue that can and has reoccurred more than anything else IMO is that the original seller cannot just waltz out and get a new loan after their credit has improved.

You might choose not to renew leases, make improvements, and then raise rents after taking over.

Clear opportunity for improvement How did you find this deal and how did you negotiate it?

What are the chances they do?

Once the construction of the business building was far enough along (but no more than 180 days) that the price of the land and the amount of improvements you make on it are equal to the sale of your old investment property you take title to it and that would complete your 1031 exchange. 

By any chance, do you know if you're eligible for any government grants and/or funding?

Also while there is no guarantee rents will continue to increase in the future I believe there is a good chance they will. 

True, converting a personal Schedule E to a partnership will indeed reduce your IRS audit chances, statistically speaking.

With the use of VRBO, Booking.com and direct bookings can all raise your chances of staying booked and being successful.