I'm not saying they're prefect but their word holds weight.

Make sure you are following the property USPAP guidelines for appraising property value because the only person's opinion that matters is the appraiser when financingI put little to no weight in appreciation. 

It would have been much more difficult to make this deal work with regular investor financing, but the VA option makes the numbers work even in the current rapid inflation of the Phoenix market.

I'm hoping to get some recommendations on a good CPA who works with real estate investors in the Kalamazoo/Grand Rapids Michigan Area.

We've used your strategy multiple times and actually count you as someone who has been instrumental to the rapid growth of our real estate portfolio. 

Is there fire blocking for the upstairs so the fire doesn't rapidly spread to their unit and they have time to escape a fire?

A good GC is worth their weight in gold, but a bad GC can turn your life upside down...not only that, but the way you communicate with and manage your GC can have a huge effect on how successful the project is, how much you end up paying, how long it takes, etc. 

They will be able to lay out your options and you can weight the pros/cons. 

Great rental market, growing economy, rapid growth and expansion.

Going from the regulations I am fairly confident it wouldn't qualify because of the type of property it is and it wouldn't fall into the "the following assets are inherently permanent structures (i.e. real estate) if they are permanently affixed to real estate, including being affixed by weight (Reg.1.1031(a)-3(a)(2)(ii)(C)   Goodluck with your 1031 it is great you are doing your due-diligence before hand because I have too many clients fair 1031's because they are not prepared and just think they will be able to find something within the time limits.