My name is Valerie Kester and while I have bought and sold several personal residences (including landlording)  I am brand new to the investing side of real estate. 

Thanks for the explanation @Curt Davis but If I'm not mistaken the property mgt. company role does not end on assigning a resident and collecting rent.What about ongoing fixes around the house (broken appliances, electricity issues, etc.) ?

In Georgia it makes a difference, whether it's a personal residence or if it's an investment property.

Is there still hope to negotiate the short sale despite the prior homeowner, who no longer owns the residence, refuses to give me authorization to speak with the bank?

@Dick Stevens I purchased a 29 unit apartment community and the former owner had rent payments due throughout the month...crazy administration.  3rd party management spent the first couple of months getting all residents on the same due date.

Here are my two questions:1) Can we occupy it as residence but rent part of the house out to a relative so as to still have it qualify as a 1031?

Unless its a multifamily home with a single meter and common areas who ever resides in the home should be responsible for all utilities.

If he does that he will defer all tax.When you go to sell that property you will be selling your primary residence and your gain will be tax free. 

@Matt Said - is this your primary residence?

He resides 3 hours away, not in the property.