There are specific rules for 1031 exchanges including:The replacement property must be identified within 45 days of transferring the relinquished property.The replacement property must be received within 180 days after the transfer of the relinquished property or the due date of the taxpayer's tax return, whichever is earlier.Special rules apply for exchanges between related parties (defined in § 267(b) or 707(b)(1)).Real property located in the United States and real property located outside the United States are not considered property of like kind.Cost Segregation StudiesA Cost Segregation study is an IRS approved federal income tax tool that increases near term cash flow by utilizing shorter recovery periods for depreciation to accelerate return on investment.

You'll likely have to pay cash for the property as it's unlikely you'll find financing for this type of endeavor. 

Properties in West Hartford, Avon, Simsbury, Farmington and to some extend Bloomfield are going for $100,000 + over asking price with 5 -10 offers within 24 hours of an open house with all offers having NO contingencies, no inspections, and the majority all cash so no financing.  

Purchase price: $163,400 Cash invested: $25,000 Sale price: $240,000A buy&flip project on a Single Family House10K - Flooring, Trims and baseboards8K - Interior Painting3k - Updated water heater, and gas permit2k - Other minor fix, ceiling fan, windows, light bulb, new fridge, and more2k - Holding cost, HOA, and other related utility feesTotal cost of repair - $25k

If the contingency reserves were paid in cash, they may be refunded to the borrower.The contingency reserve may be considered as part of the total renovation costs or the borrower may fund it separately.

These companies typically handle the construction and sometimes even the property management, which can be a great way to enter new markets without needing to be hands-on.In terms of returns, BTR properties generally offer stable cash flow, especially in areas with strong rental demand.

Interested in learning how that worked out as getting ready to purchase my first in the Smokies and with the Property Management fee, the cash flow looks to be upside down and the rates that they are also charging are lower than I would have thought in looking at the actual rental data 

IMHO and all things being equal, this route would be the fastest way to cash flow and scale.  

Purchase price: $124,000 Cash invested: $10,000 Single Family - good condition home What made you interested in investing in this type of deal?

As for reporting the rental income, it’s worth considering if you plan to leverage it for future refinancing or other financial opportunities.