This could potentially reduce or eliminate your state tax liability on the property with a gain. 

To me the $1500-$4000 a year delta between a 12% and up to 20% is not worth the risk of potentially losing a significant portion of my capital.

There are a few good properties on the market that I feel have potential. - I have only ever purchased a turnkey property.

Consider factors like location, demand in the market, condition of the property, and potential rental income.

It shows the importance of vision and timing in real estate investments.Here are a few points to highlight and expand upon your experience:Identifying Opportunity: You've done an excellent job of seeing potential where others didn't, which is a crucial skill in real estate investing.

You have the potential to attract equally excellent or even superior tenants, thereby increasing overall revenue.

My thought process is that this would be an equity play but am worried that I would be handcuffing myself for future investments.Option 2 House Hack with Partner: My friend/ potential partner is looking to do the same thing.

You may also meet someone  that could be a potential business partner. 

More on my first investment, this quadplex is a fixer-upper and has the potential to add 200k+ in equity with about half as much invested.

Alternatively, you could potentially try posting about their swap opportunity on facebook groups or a simple google search of Home Swap websites could also yield results.