The more I type the more scam-like this whole thing sounds lol.My wife was one who thrived in the educational system we have today, she knew exactly what she wanted to do from a very early age.

By word of mouth, many people know of my beautifully furnished pool house and I receive requests to book my place by email (most of the time I personally know a person that works with them so everything is super safe, they are in our working network, if not I always call the company to make sure it is not scam).

scam 100%, no private lenders will lend at 5%. 

If so, did you encounter any issues with the delinquent owner during the process? 

The loan application fee was quite a bit more than I would like to have paid but I am well aware of the potential for being scammed and have done lots of research on the list of lenders with whom I have connected.

I have never encountered a 4 home or 4 loan max. 

Yesterday I encountered the following problems with a family living on one of my properties:1.

So, I don't think you can pull it off unless you're in full on scam mode.

(The wording of your post sounds like doing a 1031 after the sale; I may be inferring to much, but I've encountered this misconception way too many times and would be glad to spare you from any tax surprises.)1031 is intended for property held for investment, not property held for sale.

But the lender was just scamming me.