Also what are 1031 exchange fees?

@Alana Reynolds you should check out what fees other STR's in the area are charging.

He has agreed to pay off the taxes owed.I'm not what steps are required for us to move forward. 

It's a fine business model as long as you don't mind your tenants paying fees for your use of the software. 

If they are asking for any upfront fees besides the appraisal, -- Run! 

If you want to BRRR there are lenders who will offer you a hard money loan that converts to DSCR once your renovation is complete (and it will save you some money in origination fees staying with same lender).

So I had to pay the subscription fee.

There's < 2 months of seasoning for the purchase, cash into the deal is ~$975k w/o rehab (minimal planned so far - turnkey), purchased the property for 35-40% below assessed value, 825+ FICO, and would optimally like to pull out $975K-$1.15M of equity.Main scenarios we've thought of to accomplish this are: 1) structure sale of property from SMLLC to self and secure 30-year new purchase financing on deal (unsure if legal and tax implications if above initial cost basis)2) delayed financing (LTV restrictions a concern)3) cash out refi (seasoning concerns)4) DSCR (seasoning and rate competitiveness concerns)5) one of the above plus a HELOC, personal loan, etc.?

Downside on FHA is the Self Sufficiency rule where all units, taken at 75% of gross rents must at least equal the total mortgage payment including property tax, home  insurance and FHA monthly mortgage insurance.

High real estate taxes and older homes requiring a lot of repair and maintenance.