They get a higher return since they are covering housing cost, have the $250k per spouse primary residence deduction in gains, is a savings account, higher leverage position, lower interest rate possible, will pay more premium for location, etc.House might be overpriced for REITs but not for home owners.  

Then you need to bid fair market value, not appropriate the bid to take into account the STR revenue but more so LTR.

That would be around $90,000 sitting in a savings account!

If you sold it for $500K (after expenses) and invested it in a savings account (or some in a RRSP or TFSA-up to your limit), even at 4%, you'd get $20K a year.Also what province is it in? 

A great deal of accountants work with out of state clients.

Please speak with your tax accountant asap or find a 1031 intermediary asap.

This doesn't account for transaction costs and reduction in leverage as you pay down the mortgage which accounts for closer to 2-3% less, so you 12-18%. 

A fake and basically empty Facebook account (with a hotmail email attached to it) was planted to give itself some credability.

I have never approved a tenant without meeting them, if everything looks good on paper, income, accounts, backgrounds.

This includes all charges paid, utility accounts set up, renter's insurance established, lease signed, etc.