If you stick with the larger down payments, you’ll have more stability and less risk, especially if the market shifts, but it will slow down how quickly you can buy additional properties.

Net effect, typically, means distributions are not taxed in current year, but do lower your basis resulting in larger tax bill upon sale.Depreciation reflected in the net gain/loss from rental box on K-1.  

A 1031 exchange is a smart choice for your parents, reducing immediate taxes to $70K (capital gains on $300K boot + $25K depreciation recapture) versus $148K without it.

They may be regulated, they maybe aren't.A Credit Union is a good choice for funding.

be smart make the right choice

Anyone that rebuilds after this fire knows the choice they are making.

That would set you up and make it easier to scale to another or larger project.

Looks better for them and gaining a sale and higher property value gives a larger commission. 

The 3 issues you described are all fairly large red flags, especially for someone's first property.

You have a choice. 1.