I will receive no benefits from the increased rents unless I exercise my option to purchase and become the owner.The property manager will not have to change his current routine or job, except for handling increased traffic of new tenants.This plan is beneficial to both of us, because it allows me to minimize the risk involved with purchasing the property, while you enjoy increased rents for a few months.

In my area there are $5-600K tear downs that are routinely bought by cash buyers to throw up a million dollar mansion.

You need to start talking to contractors and getting a general idea for what the $ psf is for various items that routinely need to be fixed.

That is also a good time to ask whether the lender's appraisers are investor-friendly.I routinely sell properties to FHA buyers (although I prefer not to) so don't think that it cannot be done.

My 1031 company has a summary guide and in it they say:"The equity in the replacement property must be equal or greater than the net equity in the relinquished property(contract sales price less routine transaction expenses less the mortgage payoff, if applicable).

Also currently the building has seven bedrooms and three showers between all the units, and they all draw from the same tank, which can obviously be an issue.My understanding is that tankless is slightly more expensive initially, uses appreciably less energy, but the gas costs are counterbalanced by the cost of routine maintenance, so it all costs about the same.You can also get tankless electric, but I think that would require a decent amount of additional electric work. 

Have a routine.

I'm not necessarily relying on refinancing to fund my next deal after this (through a combination of house-hacking in Chicago and being able to routinely save $4-5k/month by doing pretty well at work), but it would be nice to see--and be prepared for--the day when I can build my portfolio with borrowed money vs. waiting until I have a new $20-30k saved up. 

You will be lucky to keep 50% of your rental revenue and, over time, will be lucky to collect 10 months of rental per year as an average.So be prepared to only realize 84% of expected rental income and then will lose 50% of that to taxes, insurance, management, routine maintenance and playing catch up on deferred maintenance.Run your numbers off of those calculations and if you like what you see, then you will at a minimum have a more realistic outlook and expectation going into your investment.I'm not sure there is much difference between the two markets.  

Letters and phone calls are routinely ignored.