He is renting the unit and will carry a bit of debt for a couple years but once he is clear of that he will do very well for himself.Park owners want their empty spaces filled. 

Of course when doing the 1031 exchange your basis will carry forward into your replacement property.Where you have a potential issue is establishing your intent to hold those properties but immediately selling one or more them as soon as you have them ready. 

@Joel Florek will your bank let you get cash out at closing even if the seller is carrying a note? 

@Heather Bailey while I live in my duplex, I have a standard Hazard insurance policy and I also carry an additional 500k umbrella policy (optional); both policies cover the entire building, but there's no separating it. 

These should be reflected in the purchase price or negotiated as part of the terms, such as the seller carrying some of the renovation burden.Use seller financing to your advantage by proposing a price closer to $225,000-$250,000 with terms such as 20% down, a low interest rate (4-5%), or interest-only payments for 3-5 years, with a balloon payment once renovations are complete and cash flow stabilizes.If the seller is firm on price, consider negotiating higher down payment terms to reduce the financed amount, paired with interest-only terms or a price reduction tied to renovation milestones.Key questions to address include the condition of the septic system, which can be a significant expense if it fails.

I would also share pros and cons of paying taxes on the windfall versus owner carry.

Back then we were getting 1% positive carry e.g.

Section 8 would tend to carry higher repair and as a result, additional vacancy.OP’s definition of cash flow is rent minus piti.  

Having the seller carry a second is not a problem for the first, as long as their business with you is finished and the loan has closed.

Passive losses exceeding this limit can carry forward to offset future passive income or gains.