You should be aware that taking "loans" from your 401K will result in double taxation (i.e. you borrow before tax dollars that are then paid back with after tax dollars, and then re-taxed upon qualified withdrawal).

My question would be, why wouldn't you execute another 1031 on this property to continue deferring taxation? 

Doing either requires you to sign a form stating you are a Virginia resident, and the Commonwealth's Department of Taxation takes that as you stating an intention to remain in Virginia after your military service is done.

The investor is getting cash along the way to provide some liquidity.... monthly or quarterly distributions plus a real shot at some return of capital in ~ 2yrs.

You run into basis and excess taxation issues as soon as you transfer long term hold property into a corporation.

If there are animals in the home, I'd recommend at least quarterly. 

rehab costs are not known (but perhaps much 100-150k; I have not invested or fixed yet so this is a total guesstimate)The neighborhood looked quite beat-up and about 10% houses in a quarter mile radius have broken walls, plywood patched windows, and/or rusted cars parked.

While Congress enacts taxation legislation, the IRS writes enforcement and criteria.  

I inspect every quarter.

In addition, Delaware statutory trusts were shown to be considered a trust for federal tax purposes, making them a pass through entity that mitigates taxation for their trustee(s).[8][9] The second holding offers the opinion that real property, being held under a Delaware statutory trust, is eligible to use a 1031 exchange, without the recognition of gain or loss, as long as the following seven restrictions are met:[8][9]Once the offering is closed, there can be no future contributions to the DST by either current or new beneficiary.The trustee cannot renegotiate the terms of the existing loans and cannot borrow any new funds from any party unless a loan default exists as a result of a tenant bankruptcy or insolvency.The trustee cannot reinvest the proceeds from the sale of its real estate.The trustee is limited to making capital expenditures with respect to the property for normal repair and maintenance, minor nonstructural capital improvements, and those required by law.Any reserves or cash held between distribution dates can only be invested in short-term debt obligations.All cash, other than necessary reserves, must be distributed on a current basis.The trustee cannot enter into new leases, or renegotiate the current leases unless there is a need due to a tenant bankruptcy or insolvency.Best Regards, Elder Jeffre Saint James