He can defer all the gains via a 1031 exchange but will have to replaced the downleg (relinquishing property)  with something greater and replace the existing debt (if any) with equal of greater debt.   

You will be pulling pre-tax funds and paying the loan back with after-tax monies, while depleting your 401k balance that you could use to invest in tax-deferred environment.

She's just deferring payment to you.

The owner did not want it due to the deferred maintenance, so we were able to purchase it for less than the original asking price of $125,000 How did you finance this deal?

If you add on the lesson of Tax Deferred and Tax-free methods to make Cash Flow, then, you will end up thinking like me.

The others I'm not as familiar with so I'd defer to other people.

I defer to someone with more experience in that arena though and hope you get someone that provides a more seasoned answer for you.

@Dave VonaIt’s great that you’re thinking this way from the beginning.One thing to consider in SFR’s is the age at which deferred maintenance will start to increase.

However, having a 3rd party to defer decisions too is always a good negotiation tactic to gain you some time to make a more informed/thought out decision.

Plus, the cost of renovating her apartment (since she's been there I have trouble doing potential upgrades) can be deferred while I can concentrate on more juicy projects.