Its all part of the greater equation to determine if the investment property is worth it!

It's part of the equation when you make an offer.your listing price is too high.

You have only figured 5% to vacancy which equates to only 2.5 weeks of vacancy per year.

People with lousy properties have to offer them at low prices which equates to a higher cap rate.

TO MANY INVESTORS FALL IN LOVE WITH "PAPER RETURNS" AND DO NOT THINK ABOUT THE MOST IMPORTANT PART OF THE EQUATION......WHICH IS THE HOUSE!

Profits do not come into the 1031 equation.

Aside from all that, the main idea in the refinance part of the equation is to do your own cash-out refi to restructure the debt in a more economical vehicle, pull out some equity from the delta you've created between the purchase price and the ARV once your rehab is completed. 

I can see what he is doing and I can have my nephew, adopted son, step son, retired father, wife, girlfriends son, or whomever do what @Alex Bockey is doing and cut him out of the equation. 

For these types of buyers, owning property equates to paying taxes, insurance, maintenance and no more cash flow.

You purchased a tax lien, not real estate, so the tax lien and its holding period is not part of the 1031 equation.