Property that qualifies for 1031 treatment is property you purchased with the intent of holding for productive investment use (not fix n flip). 

He inspected the unit and performed a liquid treatment 3 times - he would treat it, then come back a few weeks later to treat again, and then again.

Now whenever someone says "man my back is sore" her immediate response is "oh it's probably whateveritis!"

I know taxes outside of retirement accounts for REITs can be a bit complicated, but I think the tax treatment is the big difference as far as I can tell. 

If it is a single member, then by default it will be disregarded by the IRS unless you elect to have it taxed as an S or C corp.If it is a multi members LLC it will be by default seen as a partnership, unless you elect to have it taxed as an S or C Corp.Depending on the status you choose, your state tax treatment will be different too...

It had enough water rights to be able to have our own water treatment plant as well which will be a nice income generator for many years to come.

Added a new roof, termite treatment/inspection and then on to paying off the original owner after refi.

Tax treatment gets a little complicated when two individuals buy a multi-unit property and one of them occupies a unit. 

They respect the property because they are your friend, or they routinely expect special treatment from you because they are your friend.  

I’d run like a bat out of hell from a lagoon or a water treatment plant , though.Again, it is best to get some input from an experienced operator but consider this:  if a newbie who has just been reading books and listening to podcasts can pinpoint red flags, you know that’s a deal to run from.