If they put the 1031 into something with predictable passive cash flow net of expenses then you have predictable income with which to leverage your construction business but at the same time they keep their 1031tax deferral intact.A big key to this would be for them to invest in debt free instruments that qualify for 1031 treatment but minimize risk and concentrate the risk into the endeavor with you. 

And I would set certain criteria that would make it very clear whenever a tenant has "earned" the right for treatment like that, to a certain extent...I would not tolerate it from a renter that is chronically late or doesn't take care of my property though.

Find reasons why you think any advice received is not good advice and find reasons why it is.Evaluate them and visualize these, make a decision.

It's tough to visualize based on the pictures you've got.One thing to keep in mind is the Triangle Rule for kitchens.  

The trompe l'oeil wall treatment on both stories of the great hall is still in amazing shape despite a handful of small cracks in the plaster.The original kitchen on the back of the house and the servants quarters above have been converted into an 2-bedroom apartment (I would guess back in the 40s based upon the age of the appliances - there's a 1930s/40s electric range which is in like-new condition.Similarly, the gardener's quarters in the walk-out basement has been turned into a 1-bedroom apartment - probably in the 1950s.  

Question for you seasoned vets and contractors.What are the visual clues to differentiate between the two.Here is what I believe, please add to the list or correct me.Manufactured: or (Double Wide) I believe these could be used interchangeably. 

I don't have the experience to visually estimate repairs, but the property is a hoarder house and needs a lot of work.

The paint is superior for cabinets and will hold up to the treatment of tenants.

I can visually picture my tax return, sitting on a desk ready for me to pick up from my accountant. 

If so, it would not qualify for 1031 Exchange treatment.