I'm also a strong believer that if your provide the tenants with a property demonstrating good care, they will be more apt to maintain it in good condition.So, while our return on investment may take a little longer than some of our neighbours, we are fully rented save for one unit which just came available (after three years) despite the fact vacancy in our are has risen from ~3.4% to ~8% in the past three years.  

@Joe AuBasically, you would have to demonstrate to the IRS that you have an honest intent to make a profit.  

You've already demonstrated to them your willingness (Lack) to pay.

The seller has held title for quite sometime, so they have clearly demonstrated their intent to hold for investment purposes. 

(CRMC).These are companies that have been audited by the National Association of Residential Property Managers and have demonstrated a high standard for both procedures and customer service.I believe the best way to find a good property manager is to seek a property manager out and has invested in advanced training and education and has attained designations, usually they also have years of experience.

You will also need to demonstrate that you you have enough Liquid Capital to cover 6-12 months of Mortgage Payments, Property Taxes; and in some states Property Insurance.

The only way you could convince me was if you made some sort of demonstrable change and then... stopped crashing!  

Using your numbersPurchase price - $230k to $300k say $265 for demonstration purposes20% down pmt = $53, 000Loan amt $212,000 at say an 8% interest rate = pmt of approx. $600/mo or $7200/yrMonthly Rent = $2,500 less 50% expenses = Forecast NOI $1,250/mo or $15,000/yr less debt service = annual net cash flow $7,800Resulting ROI = 14.7% ($7,800 / $53,000)Again this is based on your numbers

Do they have demonstrated experience with 1031 exchanges or have they just heard of them? 

(Neighbors, family members, tenant/landlord, business partners would not be considered arms length transactions) If a comp never comes to market, how can you demonstrate it was market value?