I almost never use E/M (Texas) because sellers don't care as long as I'm solving their problem.

Likewise, the fact that they didn't properly realize how good they had it with you for so long isn't your problem.

I was told this was not proper. 

Much more likely to make a mistake and buy in the wrong area and overpay if you don't do the proper research.I generally only recommend to more seasoned investors, but it can definitely be done.

(E) "Foreign real estate" means real estate not situated in this state and any interest in real estate not situated in this state.

they purchased the property to sell and that disallows it for 1031.The more proper way to do this would be to sell as yourselves and buy the replacement property as yourselves (letting your son help direct what you buy). 

This is a great spot to get the investor juices flowing. 

I have no idea if Zillow is accurate or not but more modern homes in the neighborhood are selling for $200-$300k so it may be a good rough estimate as I haven't had it properly appraised yet.

You need it properly converted with permits to have it zoned as a living space (second unit) otherwise you will violate your insurance.

Hi David,This may be too late for you, but this is a common issue when laying tile over top of concrete if not done properly.