They've had time during the week to get things sorted. 

I started this thread a few years ago, when I first heard about this sort of 1031 investment.I eventually decided to pull equity out of the asset that I was contemplating doing the 1031 with. 

Hey @Jeff Ryan - While I can not speak to your exact situation, I can speak to the thousands of homes I have walked here in Chicago, where majority of the homes were built in the late 1800s/early 1900s.I would say that 7/10 of the older homes I look at have some sort of settlement in the foundation, which causes the cracks and sloped floors you are mentioned you are seeing in your property. 

Any sort of walkability is a huge plus since you can't add much more value other than a typical remodel.Good luck!

One day the SEC my let them know the fine when they investigate a deal that has a complaint of some sort. 

This is exactly the sort of thing they would handle for you seamlessly.

And that is true, but that is also sort of like saying "to mitigate the risk of investing in Apple, and relying on their decisions, I will start my own tech company" (okay, that is a bit extreme, but you get the idea).  

Borrowers need skin in the game.

Let's say someone was bungee jumping off a balcony railing and the railing broke and they fell, injuring themselves.They could sue the property (ownership LLC) because the railing was "not secure".They could sue the manager (management LLC) for not ensuring the railing was secure.They probably will sue both and let the court sort it out.I don't see how 1% ownership of one LLC to another prevents any of the above from happening.

They'll be all sorts of SIGNIFICANTLY EXTRA tenant complaints!