I’m very open to any discussions and or advice, I look forward to learning from you as well as you from me.

@Chris Watson, Since your basis both adjusted and depreciable carry forward in a 1031 you will be able to take advantage of whatever depreciable basis is left as long as your purchase of depreciable property supports that number.   

Even if I can't claim this deduction in 2017, going forward I'm wondering what we need to do in order to get this deduction.

Again, I would proceed cautiously because the last thing you want to be stuck with is an illegal duplex that loses money.If you can solve that problem and go forward, I would remove the pool.  

One might be able to make a good case that looking forward 10% is a little optimistic, but the CAGR on the S&P itself or an equities-heavy basket of ETFs usually comes out around 8-9% over a long enough timeframe iirc. 

if it's good, move forward and thank your mentor, if it's not good then he will not steer you towards a bad deal.

After the inspection, if I still want to move forward with the purchase, then the seller will sign the PSA.I don't understand the game that the seller's agent is playing and i am seeking advice from the BP community.Thank you

Looking forward to getting to know you guys and hopefully getting some investing going!

I look forward to connecting with and meeting some of the folks here, especially those from the Denver area that may be investing in the midwest!

I appreciate you taking the time to provide guidance and I definitely am looking forward to networking with lenders/investors and agents to do exactly that.I'll be sure to reach out to pick your brain soon!