The lease says that she must gain owners permission if the guest is to stay for longer than 30 days. 

To make matters worse, the IRS will recapture all of the cost-seg stuff that lowered your basis, which means you will be taxed on a significant gain, even though you lost money.

I am slowly building my people around me and gaining knowledge daily.

I understand that how you structure your business could benefit from tax strategy, but how many ways can you buy or sell a property to avoid capitol gains, etc, unless you're doing a 1031 exchange?

It makes sense to harvest that gain, then repeat the process on the next investment. 

This allows you to defer all of your capital gains through a 1031 exchange.Additionally, it’s important to keep in mind that the exchange must be like-kind.

Greg Scott is correct, you will have to pay capital gains tax on any monies you take possession of. 

Anyone buying property right now I would recommend the hold be 5 years to break even and 10+ years to see the significant gains.

Should they be made into a small common area that the main unit also has access to?

So, this is putting him in the position to have to look at the possibility of doing a 1031 exchange on the 2.5 - 3.0 million that would otherwise be taxed at capital gain rates (he wants to avoid paying Uncle Sam at all costs).