Assuming that you have a properly formed contract, the short answer is that they can refuse to perform, but there will be consequences.Those consequences normally play out in court, so it's not normally worth the cost to pursue it. 

Please help as I'm confused about how big of a role this finding plays.

Big items to put into the joint venture or operating agreement in the llc :Who will play what role?

I won't play that game.

I'm really just trying to play with numbers and get some reps in to learn how to analyze properties for when I'm ready to pull the trigger on REI.

Playing the long game has never hurt me is real estate, but being short-sighted has bitten me in the *** a few times. 

If you had 2m in 1031... how would you play it?

Smaller multifamily properties are definitely going to be more time intensive, especially if you are self managing.Suggestions would be to get concrete on your goals and what exactly you want to do in real estate.

Development/re-development plays like this are 'put money in now, see zero cash flow while the project goes through its steps, then finally see investor returns when the property sells or refi's/holds.'   

The Negotiation Dynamic is like a stage, where the performance (your negotiation with the Seller) is about to play out.And that stage is set by your lead generation strategy.