Looking for lower $ down as land is worth double now (around $300K).

Smaller cities in the surrounding areas of Madrid, like Torrejon, Guadalajara, San sebastian de los reyes... etc always present some cash flowing option.

We did get negotiate money from them to help with roof repair, but now know they were not honest on their disclosure.Our inspector missed code violations, HVAC issues, pipes that had been worked on and issues hidden that had occurred while sellers lived in the house, signs of drainage and water damage inside the house that had been painted over, completely blocked dryer vent...and we are finding more daily.We have had the house looked at by a structural engineer and HVAC techs that has told us we need thousands (likely tens of thousands) of dollars worth of repairs to make this property able to rent and come up to code for rental. 

The way foreclosures are offered varies greatly around the country, and we don’t know where you are located… but where I am at they are all cash affairs, with the money due within 24 hours of winning the bid.  

We decided to rent it out and the property now cash flows us $800/m with a 2.25% rate.

In other words, what are all the benefits of 1031’ing a rental property worth 300k for a property worth 600k?

I don’t think this is a risk that is worth even considering, honestly. 

Market Fluctuations: If the market value drops, you could end up paying more than the home is worth.

It will be impossible to find something cash-flowing as an annual rental in that price range and asset class.

That hurts the pocket and cash flow at the same time and it can get ugly fast if not managed.