You have to try to estimate MTR income in your area + take into account the costs associated with MTR setup.

The exemption allowed results in a “taxable value” of either 75% of the “ATI fair market value” or the final Current Fair Market Value for the tax year of sale, whichever is higher.

I  Income:  The amount of property you can buy will be dependent on your Debt to Income ratio.  

Consider Section 8 housing for steady, government-backed income.

Also, I'm not sure how you're paying attention to it on the tax side, but the unit that you are living in's profit at sale is calculated differently than the other unit that you're renting out.Once you move out, that unit is officially available for rent so from that point forward, any profit gained at future sale will be calculated starting from that point and will be taxable.

The insurance payout also impacts your taxable gain.

Gains are taxable. 

Alternatively, your in-laws could partially gift the property by using the annual gift tax exclusion ($34K per couple annually), lowering the sale price and their taxable gain.

A deal this small wouldn’t make sense as a partnership unless the original intent was to scale and grow together assuming this deal works out.In regard to the financing, if you can’t get it on your own without someone else’s balance sheet and income then it would be very difficult to untangle that partnership since he’d be a personal guarantor right along side you.  

However, the IRS may scrutinize exchanges if the holding period post-transfer is too short (typically 12-24 months recommended).If one partner wants to defer capital gains while the other prefers cash, the deferring partner could reinvest their share into a Qualified Opportunity Zone (QOZ) fund, which can defer and reduce taxable gains if held for at least 10 years.