Still, no lender can use the borrower's current status as a reason to deny a short sale but, the borrower would need to be in imminent danger of default.The lender, upon request by the borrower, must provide the borrower with any and all requirements for alternatives to foreclosure and give them 30 days to respond and meet the requirements of the lender.

Alternatively, negotiating a deal can be much easier if you're transparent as well.

Given the long term nature of our relationship with the owner, he was kind enough to allow us to view the listing before it went public and given we had already completed an enormous amount of research into the project we were able to offer full asking price.

Given the long term nature of our relationship with the owner, he was kind enough to allow us to view the listing before it went public and given we had already completed an enormous amount of research into the project we were able to offer full asking price.

@David Kelly Would you suggest another alternative for me to get capital to use for 20% down?

And that's natural - but the key is to overcome it.

Therefore, this really is something you should be discussing with your CPA.The problem seems less about the nature of the first property's sale income, but rather that the second property was not purchased by a QOF.We can't do backward tax planning in this area.The QOF needs to be established before the second property is purchased, and there are several hoops you need to jump through. 

As a property manager I am (naturally) somewhat biased towards keeping a property and renting but agree wholeheartedly above.

Another alternative is to sell with owner financing.

Do you have any recommendations on cheaper alternatives to agents...mostly just someone to help us through the legal paperwork and make sure everything is legit.