Are there any Depreciation recapture or capital gain Tax dispositions that need to be resolved with the exiting member?

You’ll have 45 days from your sale to identify them and you’ll have to buy enough of them, and only them, within 180 days of your sale to meet your 1.1M requirement, or face taxes.

that we’ve learned in our 24 years, managing almost 700 doors across the Metro Detroit area, including almost 100 S8 leases:Class A Properties:Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.Vacancy Est: Historically 10%, 5% the more recent norm.Tenant Pool: Majority will have FICO scores of 680+ (roughly 5% probability of default), zero evictions in last 7 years.Class B Properties:Cashflow vs Appreciation: Typically, decent amount of relative rent & value appreciation.Vacancy Est: Historically 10%, 5% should be applied only if proper research done to support.Tenant Pool: Majority will have FICO scores of 620-680 (around 10% probability of default), some blemishes, but should have no evictions in last 5 yearsClass C Properties:Cashflow vs Appreciation: Typically, high cashflow and at the lower end of relative rent & value appreciation.

You borrower at a lower rate to invest in something higher.

The negatives are that rents are might be lower than market rates and definitely than Airbnb rentals.

My payment with insurance & taxes is $1425 a month.

There are some programs through local government systems where you may be able to receive a tax abatement or grant here in Michigan in an effort to help beautify a neighborhood.

The only other option would be to get a coborrower to bring the down payment or get seller financing with a lower down payment. 

One of my connections will fund the rehab for less and give it all to us on the upfront to finish the project at a lower cost.

It would be a good idea to assess your tolerance to risk and then plan something like that, but using a heloc is going to be around 9-11% in this market so to pay something off with lower interest rate to borrow more might not make much sense.